Lim vs.

Philippine Fishing Gear Industries Inc

Lim vs. Philippine Fishing Gear Industries Inc. [GR 136448, 3 November 1999]

FACTS: Lim Tong Lim requested Peter Yao and Antonio Chuato engage in commercial fishing
with him. The three agreed to purchase two fishing boats but since they do not have the money
they borrowed from one Jesus Lim the brother of Lim Tong Lim. Subsequently, they again
borrowed money for the purchase of fishing nets and other fishing equipments. Yao and Chua
represented themselves as acting in behalf of “Ocean Quest Fishing Corporation” (OQFC) and
they contracted with Philippine Fishing Gear Industries (PFGI) for the purchase of fishing nets
amounting to more than P500k. However, they were unable to pay PFGI and hence were sued in
their own names as Ocean Quest Fishing Corporation is a non-existent corporation. Chua admitted
his liability while Lim Tong Lim refused such liability alleging that Chua and Yao acted without
his knowledge and consent in representing themselves as a corporation.

ISSUE: Whether Lim Tong Lim is liable as a partner

HELD: Yes. It is apparent from the factual milieu that the three decided to engage in a fishing
business. Moreover, their Compromise Agreement had revealed their intention to pay the loan with
the proceeds of the sale and to divide equally among them the excess or loss. The boats and
equipment used for their business entails their common fund. The contribution to such fund need
not be cash or fixed assets; it could be an intangible like credit or industry. That the parties agreed
that any loss or profit from the sale and operation of the boats would be divided equally among
them also shows that they had indeed formed a partnership. The principle of corporation by
estoppel cannot apply in the case as Lim Tong Lim also benefited from the use of the nets in the
boat, which was an asset of the partnership. Under the law on estoppel, those acting in behalf of a
corporation and those benefited by it, knowing it to be without valid existence are held liable as
general partners. Hence, the question as to whether such was legally formed for unknown reasons
is immaterial to the case.
ANTONIA TORRES, assisted by her husband, ANGELO TORRES; and EMETERIA BARING,
petitioners, vs. COURT OF APPEALS and MANUEL G.R. No. 134559. December 9, 1999

FACTS:

Sisters Antonia Torres and Emeteria Baring, herein 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 Manuel, who then had
it registered in his name and obtained from Equitable Bank a loan of P40,000 which, under the
Joint Venture Agreement, was to be used for the development of the subdivision through
mortgage of said property.

All three of them also agreed to share the proceeds from the sale of the subdivided lots.

The project failed and the property was foreclosed. Petitioner alleged that it was due to Manuel’s
’s lack of funds or means and skills. And also alleged that the latter misappropriate the amount
loaned to his own company.

On the other hand, respondent alleged that he used the loan to implement the Agreement, which
incurred P85,000 expenses. And further avers that failure of project was due to petitioners and
their relatives had separately caused the annotations of adverse claims on the title to the land,
which eventually scared away prospective buyers, forcing him to give up on the project.

Subsequently, petitioners filed a criminal case for estafa against respondent and his wife, but
were acquitted. They filed a civil case, but was dismissed by trial court and affirmed by Court of
Appeals. Hence, this petition.
ISSUE:

1. Whether the petitioners have formed partnership with the respondent and if they do, whether
or not it was void.
2. Whether or not respondent shall be held liable to the failure of the project.

HELD:
1. A reading of the terms embodied in the Agreement indubitably shows the existence of a
partnership pursuant to Article 1767 of the Civil Code, which 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.”
Under the 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. There is
manifestation of intent to form 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. As noted earlier, he developed the roads, the curbs and the gutters of the
subdivision and entered into a contract to construct low-cost housing units on the property.
Respondent’s actions clearly belie 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.
Further, under Art. 1773, A contract of partnership is void, whenever immovable property is
contributed thereto, if an inventory of said property is not made, signed by the parties, and
attached to the public instrument.” This was intended primarily to protect third persons“the
execution of a public instrument would be useless if there is no inventory of the property
contributed, because without its designation and description, they cannot be subject to inscription
in the Registry of Property, and their contribution cannot prejudice third persons. This will result
in fraud to those who contract with the partnership in the belief [in] the efficacy of the guaranty
in which the immovables may consist. Thus, the contract is declared void by the law when no
such inventory is made.” The case at bar does not involve third parties who may be prejudiced.

2. 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. Verily, factual issues cannot be resolved in a petition for
review under Rule 45, as in this case. Petitioners have not alleged, not to say shown, that their
Petition constitutes one of the exceptions to this doctrine. Accordingly, we find no reversible
error in the CA's ruling that petitioners are not entitled to damages.
G.R. No. 159333 July 31, 2006

ARSENIO T. MENDIOLA, petitioner,

vs.
COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, PACIFIC
FOREST RESOURCES, PHILS., INC. and/or CELLMARK AB, respondents.

PUNO, J.:

Facts:
Petitioner Mendiola (ATM) entered into a Side Agreement with Pacfor (USA) who will set up a
representative office in the Philippines. They named said office as Pacfor Phils in which petitioner
is president. In the agreement, petitioner’s base salary and the company’s overhead expenditures
shall be borne by the representative office and shall be funded by Pacfor/ATM being equally
owned on 50-50 equity by ATM and Pacfor-USA.

The Side Agreement was later amended through a Revised Operating and Profit Sharing
Agreement where petitioner’s salary was increased. However, both agreements show that the
operational expenses will be borne by the representative office and funded by all parties “as equal
partners,” while the profits and commissions will be shared among them.

Years later, petitioner wrote Pacfor’s VP for Asia seeking confirmation of his 50% equity of Pacfor
Phils to which Pacfor’s President replied that petitioner is not a part-owner, his office being just a
representative office, a “theoretical company with the purpose of dividing the income 50-50.” He
even stressed that the petitioner knew of this arrangement from beginning, having been the one to
propose to them the setting up of a representative office, instead of a branch office, to save on
taxes.

Issue:
Whether or not a partnership or co-ownership exists between the parties.

Held:
Petitioner is an employee of Pacfor and no partnership or co-ownership exists between the parties.

In a partnership, the members become co-owners of what is contributed to the firm capital and of
all property that may be acquired thereby and through the efforts of the members. The property or
stock of the partnership forms a community of goods, a common fund, in which each party has a
proprietary interest. In fact, the New Civil Code regards a partner as a co-owner of specific
partnership property. Each partner possesses a joint interest in the whole of partnership property.
If the relation does not have this feature, it is not one of partnership.

This essential element, the community of interest, or co-ownership of, or joint interest in
partnership property is absent in the relations between petitioner and private respondent Pacfor.
Petitioner is not a part-owner of Pacfor Phils. Pacfor's President established this fact when he said
that Pacfor Phils. is simply a "theoretical company" for the purpose of dividing the income 50-50.
He stressed that petitioner knew of this arrangement from the very start, having been the one to
propose to private respondent Pacfor the setting up of a representative office, and "not a branch
office" in the Philippines to save on taxes. Thus, the parties in this case, merely shared profits.
This alone does not make a partnership.

Besides, a corporation cannot become a member of a partnership in the absence of express

authorization by statute or charter. This doctrine is based on the following considerations: (1) that
the mutual agency between the partners, whereby the corporation would be bound by the acts of
persons who are not its duly appointed and authorized agents and officers, would be inconsistent
with the policy of the law that the corporation shall manage its own affairs separately and
exclusively; and, (2) that such an arrangement would improperly allow corporate property to
become subject to risks not contemplated by the stockholders when they originally invested in the
corporation. No such authorization has been proved in the case at bar.
MARJORIE TOCAO and WILLIAM T. BELO vs. CA and NENITA A. ANAY

342 SCRA 20

FACTS:

William Belo introduced Nenita Anay to his girlfriend, Marjorie Tocao. The three agreed to form
a joint venture for the sale of cooking wares. Belo was to contribute P2.5 million; Tocao also
contributed some cash and she shall also act as president and general manager; and Anay shall be
in charge of marketing. Belo and Tocao specifically asked Anay because of her experience and
connections as a marketer. They agreed further that Anay shall receive the following:

 10% share of annual net profits

 6% overriding commission for weekly sales
 30% of sales Anay will make herself
 2% share for her demo services

They operated under the name Geminesse Enterprise, this name was however registered as a sole
proprietorship with the Bureau of Domestic Trade under Tocao. The joint venture agreement was
not reduced to writing because Anay trusted Belo’s assurances.

The venture succeeded under Anay’s marketing prowess.

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

ISSUE:

Whether or not there is a partnership.

Whether or not Belo acted as a guarantor.

RULING:

Yes, even though it was not reduced to writing, for a partnership can be instituted in any
form. The fact that it was registered as a sole proprietorship is of no moment for such registration
was only for the company’s trade name.

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

The Supreme Court also noted that a partner who is excluded wrongfully from a partnership is an
innocent partner. Hence, the guilty partner must give him his due upon the dissolution of the
partnership as well as damages or share in the profits “realized from the appropriation of the
partnership business and goodwill.” An innocent partner thus possesses “pecuniary interest in
every existing contract that was incomplete and in the trade name of the co-partnership and
assets at the time he was wrongfully expelled.”

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

Tocao’s unilateral exclusion of Anay from the partnership is shown by her memo to the Cubao
office plainly stating that Anay was, as of October 9, 1987, no longer the vice-president for sales
of Geminesse Enterprise. By that memo, petitioner Tocao effected her own withdrawal from the
partnership and considered herself as having ceased to be associated with the partnership in the
carrying on of the business. Nevertheless, the partnership was not terminated thereby; it
continues until the winding up of the business.

Motion for Reconsideration filed by Tocao and Belo decided by the SC on September 20,
2001.

Belo is not a partner. Anay was not able to prove that Belo in fact received profits from
the company. Belo merely acted as a guarantor. His participation in the business meetings was
not as a partner but as a guarantor. He in fact had only limited partnership. Tocao also testified
that Belo received nothing from the profits. The Supreme Court also noted that the partnership
was yet to be registered in the Securities and Exchange Commission. As such, it was
understandable that Belo, who was after all petitioner Tocao’s good friend and confidante, would
occasionally participate in the affairs of the business, although never in a formal or official
capacity.
[G.R. No. 153802. March 11, 2005.]
HOMEOWNERS SAVINGS & LOAN BANK, petitioner, vs. MIGUELA C. DAILO,
respondent.

PONENTE: TINGA, J.:

FACTS:
 Miguela and Marcelino Dailo were married in 1967. They bought a house and lot during
their marriage in San Pablo City, Laguna but the absolute deed of sale was executed only
in favor of Marcelino and excluded his wife.
 In 1993, Marcelino executed a special power of attorney to authorize a certain Lilibeth
Gesmundo to obtain a loan from petitioner bank HSLB with the house and lot as security.
The property was mortgaged and the loan was approved in the amount of P300,000.
Miguela did not know about this at all
 When Gesmundo failed to pay the loan in full upon maturity, the spouses' property was
extra judicially foreclosed, sold, and bought by petitioner bank. Because it was not
redeemed after one year, the bank consolidated their ownership over it.
 Marcelino died and it was only then that Miguela knew of the mortgage, foreclosure and
sale of their conjugal property.
 The CA ruled that Art 124 of the Family Code is controlling in the case because it provided
for the nullity of any encumbrance or disposition without the knowledge and consent of
both spouses.
ISSUES:
 Whether or not the Article 124 of the Family Code is in effect in this case or is it the
Article 493 of the Civil Code.
 Whether or not payment of the principal obligation on the mortgage should be made by the
conjugal partnership.

HELD:
 Yes. The Article 124 of the Family Code will apply. Basically, Article 493 provides for the co-
owner of a property to have full ownership of his part and therefore he may dispose of it as
he wants. Because Marcelino was such co-owner, he can do what he wants with the property,
like mortgage it. On the other hand, Article 124 provides for the joint administration of
conjugal properties. HSLB says that the framers could not have intended that the co-owner
spouse cannot exercise his full rights because of the bar in Article 124. There is no marriage
settlement between Miguela and her dead spouse, so their property regime is automatically
conjugal partnership of gains or CPG. If there is no consent as to the action of one
spouse with regards to the administration of the property, the same is void.
 In this case, No. The HSLB says payment of the principal obligation on the mortgage should
be made by the conjugal partnership because the loan redounded to the benefit of the family
under Article 121 of the Family Code. But the burden of proof lies with the HSLB, on the one
who alleges that the mortgage benefited the conjugal partnership. HSLB alleges that the loan
was used to finance the construction of housing units but it was not adequately proven. Also,
since they kept on saying that Marcelino owned the property in his individual capacity, it
cannot be admitted that the money was used for his family.
Hrs. of Tan Eng Kee v. CA, 341 SCRA 740

Facts:

Tan Eng Kee (Kee) and Tan Eng Lay (Lay) are brothers. After the death of Kee, his common-law
spouse and children (Heirs), filed a suit against Lay for accounting, liquidation and winding up of
the alleged partnership formed after World War II between Tan Eng Kee and Tan Eng Lay.
Petitioners amended their complaint impleading private respondent herein BENGUET LUMBER
COMPANY, as represented by Lay. They alleged that after WW II, Kee and Lay, pooled their
resources and industry together, and 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.

Issues:

Was there a partnership between Kee and Lay?

Are the petitioner heirs entitled to accounting of the partnership assets?

Ruling:

No, there was no partnership. The SC affirmed the CA’s ruling that Benguet Lumber was in the
form of a sole proprietorship.

The best evidence to determine if partnership existed would have been the contract of partnership
itself, or the articles of partnership but there is none The Court then determined whether a
partnership existed based purely on circumstantial evidence. The evidence presented by petitioners
falls short of the quantum of proof required to establish a partnership.

Firstly, there is no evidence that Kee contributed his resources to a common fund for the purpose
of establishing a partnership. Unfortunately for petitioners, Kee has passed away. Only he, aside
from Tan Eng Lay, could have expounded on the precise nature of the business relationship
between them. The testimonies to that effect of petitioners' witnesses is directly controverted by
Tan Eng Lay. It should be noted that it is not with the number of witnesses wherein preponderance
lies; the quality of their testimonies is to be considered. None of petitioners' witnesses could
suitably account for the beginnings of Benguet Lumber Company. Tan Eng Lay consistently
testified that he had his business and his brother had his, that it was only later on that his said
brother, Tan Eng Kee, came to work for him. Be that as it may, co-ownership or co-possession
(specifically here, of the G.I. sheets) is not an indicium of the existence of a partnership.

Secondly, it is indeed odd, if not unnatural, that despite the forty years the partnership was
allegedly in existence, 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. A demand for periodic accounting is evidence of a
partnership.During his lifetime, Tan Eng Kee appeared never to have made any such demand for
accounting from his brother, Tang Eng Lay.

Thirdly, Lay presented payrolls as evidence that Kee was a mere employee of the business. Article
1769 of the Civil Code provides:

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.

Finally, petitioner’s claim the alleged partnership from this set of circumstances: that Tan Eng Lay
and Tan Eng Kee were commanding the employees; that both were supervising the employees;
that both were the ones who determined the price at which the stocks were to be sold; and that both
placed orders to the suppliers of the Benguet Lumber Company. They also point out that the
families of the brothers Tan Eng Kee and Tan Eng Lay lived at the Benguet Lumber Company
compound, a privilege not extended to its ordinary employees.

Where circumstances taken singly may be inadequate to prove the intent to form a partnership,
nevertheless, the collective effect of these circumstances may be such as to support a finding of the
existence of the parties' intent. Yet, in the case at bench, even the aforesaid circumstances when
taken together are not persuasive indicia of a partnership. They only tend to show that Tan Eng
Kee was involved in the operations of Benguet Lumber, but in what capacity is unclear. We cannot
discount the likelihood that as a member of the family, he occupied a niche above the rank-and-
file employees. He would have enjoyed liberties otherwise unavailable were he not kin, such as
his residence in the Benguet Lumber Company compound. He would have moral, if not actual,
superiority over his fellow employees, thereby entitling him to exercise powers of supervision. It
may even be that among his duties is to place orders with suppliers. Again, the circumstances
proffered by petitioners do not provide a logical nexus to the conclusion desired; these are not
inconsistent with the powers and duties of a manager, even in a business organized and run as
informally as Benguet Lumber Company.

There being no partnership, it follows that there is no dissolution, winding up or liquidation to

speak of. Hence, the petition must fail.

 In other words, no partnership because

1. No common funds
2. No asking for accounting
3. No shares or talks of how much Kee was to get from the partnership profits
4. Supervising, determing price at which stocks were to be sold, placing order to
supplies, and living in the company compound does not make one a partner as in the
case at bar, Kee was the brother so it is was a privilege for him to be given special
treatment than regular rank and file employees. Nevertheless, he remains one.
Trust #1: Deluao vs. Casteel, 22 SCRA 231 DELUAO VS. CASTEEL 22 scra 231 FACTS:
Nicanor Casteel filed a fishpond application for a big tract of swampy land in theMunicipality of
Padada, Davao for three times since 1940 but no action was taken thereon by the authorities
concerned. Meanwhile, several applications were submitted by other persons for portions of the
area covered by
Casteel's application, one of them was Felipe Deluao, uncle of Casteel Casteel sought financial
aid from his uncle Deluao with which to finance theneeded improvements on the fishpond.
Hence, a wide productive fishpond was built. Inocencia Deluao (wife of Felipe Deluao) and
Nicanor Casteel executed a contract denominated as “contract of service” whereby Deluao hires
and employs the Casteel. The latter will be the Manager and sole buyer of all the produce of the
fish that will be produced from said fishpond while the former will be the administrator of the
same she having financed the construction and improvement ofsaid fishpond. At the same time,
Inocencia Deluao executed a special power of attorney in favor of JesusDonesa, extending to the
latter the authority to represent her in the administration of the fishpond. ISSUE: Whether the
agreement made by the parties created a contract of trust. HELD: The evidence preponderates in
favor of the view that the initial intention of the parties was not to form a trust or coownership
but to establish a partnership — Inocencia Deluao as capitalist partner and Casteel as industrial
partner — the ultimate undertaking of which was to divide into two equal parts such portion
ofthe fishpond as might have been developed by the amount extended by the plaintiffs-appellees,
with thefurther provision that Casteel should reimburse the expenses incurred by the appellees
over one-half ofthe fishpond that would pertain to him. This can be gleaned, among others, from
the letter of Casteel toFelipe Deluao showing the intention to divide the fishpond.
 ANG PUE vs. SECRETARY OF COMMERCE

FACTS:
On May 1, 1953, Ang Pue and Tan Siong, both Chinese citizens, organized the partnership
Ang Pue & Company for a term of five years from May 1, 1953, extendible by their mutual
consent. The purpose of the partnership was "to maintain the business of general merchandising,
buying and selling at wholesale and retail, particularly of lumber, hardware and other construction
materials for commerce, either native or foreign."

On June 19, 1954 Republic Act No. 1180 was enacted to regulate the retail business. It provided,
among other things, that, after its enactment, a partnership not wholly formed by Filipinos could
continue to engage in the retail business until the expiration of its term. On April 15, 1958 — prior
to the expiration of the five-year term of the partnership Ang Pue & Company, but after the
enactment of the Republic Act 1180, the partners already mentioned amended the original articles
of part ownership so as to extend the term of life of the partnership to another five years. When
the amended articles were presented for registration in the Office of the Securities & Exchange
Commission on April 16, 1958, registration was refused upon the ground that the extension was
in violation of the aforesaid Act.

ISSUE:
Whether or not the refusal for the extension of the life of the partnership was valid

RULING:
The question before us is too clear to require an extended discussion. To organize a
corporation or a partnership that could claim a juridical personality of its own and transact business
as such, is not a matter of absolute right but a privilege which may be enjoyed only under such
terms as the State may deem necessary to impose. That the State, through Congress, and in the
manner provided by law, had the right to enact Republic Act No. 1180 and to provide therein that
only Filipinos and concerns wholly owned by Filipinos may engage in the retail business can not
be seriously disputed. That this provision was clearly intended to apply to partnership already
existing at the time of the enactment of the law is clearly showing by its provision giving them the
right to continue engaging in their retail business until the expiration of their term or life.
To argue that because the original articles of partnership provided that the partners could extend
the term of the partnership, the provisions of Republic Act 1180 cannot be adversely affect
appellants herein, is to erroneously assume that the aforesaid provision constitute a property right
of which the partners can not be deprived without due process or without their consent. The
agreement contain therein must be deemed subject to the law existing at the time when the partners
came to agree regarding the extension. In the present case, as already stated, when the partners
amended the articles of partnership, the provisions of Republic Act 1180 were already in force,
and there can be not the slightest doubt that the right claimed by appellants to extend the original
term of their partnership to another five years would be in violation of the clear intent and purpose
of the law aforesaid. part.
G.R. No. L-25532 February 28, 1969 COMMISSIONER OF INTERNAL REVENUE,
petitioner, 
 vs.
 WILLIAM J. SUTER and THE COURT OF TAX APPEALS, respondents.
Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Felicisimo R.
Rosete and Special Attorneys B. Gatdula, Jr. and T. Temprosa Jr. for petitioner. 
 A. S.
Monzon, Gutierrez, Farrales and Ong for respondents. REYES, J.B.L., J.: Facts: A limited
partnership, named "William J. Suter 'Morcoin' Co., Ltd.," was formed on 30 September 1947 by
William J. Suter as the general partner, and Julia Spirig and Gustav Carlson, as the limited
partners. The partners contributed, respectively, P20,000.00, P18,000.00 and P2,000.00 to the
partnership. On 1 October 1947, the limited partnership was registered with the Securities and
Exchange Commission. In 1948, general partner Suter and limited partner Spirig got married
and, thereafter, on 18 December 1948, limited partner Carlson sold his share in the partnership to
Suter and his wife. The sale was duly recorded with the Securities and Exchange Commission on
20 December 1948. The limited partnership had been filing its income tax returns as a
corporation, without objection by the Commissioner of Internal Revenue, until in 1959 when the
latter, in an assessment, consolidated the income of the firm and the individual incomes of the
partners-spouses 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. Partner-Spouses
Suter protested the assessment.
Issue: Whether or not the partnership was dissolved after the marriage of the partners, William J.
Suter and Julia Spirig Suter and the subsequent sale to them by the remaining partner, Gustav
Carlson? Ruling:
No,William J. Suter "Morcoin" Co., Ltd. was not a universal partnership, but a particular one
since the contributions of the partners were fixed sums of money, P20,000.00 by William Suter
and P18,000.00 by Julia Spirig and neither one of them was an industrial partner. It follows that
the firm was not a partnership that spouses were forbidden to enter by Article 1677 of the Civil
Code of 1889 (now Article 1782 of the New Civil Code). Nor could the subsequent marriage of
the partners operate to dissolve it, such marriage not being one of the causes provided for that
purpose by law. The capital contributions of partners William J. Suter and Julia Spirig were
separately owned and contributed by them before their marriage; and after they were joined in
wedlock, such contributions remained their respective separate property under the Spanish Civil
Code (Article 1396)
G
Soncuya v. de Luna
Soncuya v. de Luna G.R. No. L-45464, April 28, 1939, Villa-Real, J.

Facts:

Petitioner filed a complaint against respondent for damages as a result of the fraudulent administration of
the partnership, “Centro Escolar de Senoritas” of which petitioner and the deceased Avelino Librada were
members. For the purpose of adjudicating to plaintiff damages which he alleges to have suffered as a
partner, it is necessary that a liquidation of the business be made that the end profits and losses maybe
known and the causes of the latter and the responsibility of the defendant as well as the damages in which
each partner may have suffered, maybe determined.

Issue: Whether the petitioner is entitled to damages.

Ruling:

According to the Supreme Court the complaint is not sufficient to constitute a cause of action on the part of
the plaintiff as member of the partnership to collect damages from defendant as managing partner thereof,
without previous liquidation. Thus, for a partner to be able to claim from another partner who manages the
general co-partnership, allegedly suffered by him by reason of the fraudulent administration of the latter, a
previous liquidation of said partnership is necessary.
 EVANGELISTA & CO. v. ABAD SANTOS
G.R. No. L-31684; June 28, 1973
Ponente: J. Makalintal

FACTS:

On October 9, 1954 a co-partnership was formed under the name of "Evangelista

& Co." On June 7, 1955 the Articles of Co-partnership were amended so as to include
herein respondent, Estrella Abad Santos, as industrial partner, with herein petitioners
Domingo C. Evangelista, Jr., Leonarda Atienza Abad Santos and Conchita P. Navarro, the
original capitalist partners, remaining in that capacity, with a contribution of P17,500 each

On December 17, 1963 herein respondent filed suit against the three other
partners, alleging that the partnership, which was also made a party-defendant, had been
paying dividends to the partners except to her; and that notwithstanding her demands
the defendants had refused and continued to refuse to let her examine the partnership
books or to give her information regarding the partnership affairs or to pay her any share
in the dividends declared by the partnership

The defendants, in their answer, denied ever having declared dividends or

distributed profits of the partnership; denied likewise that the plaintiff ever demanded
that she be allowed to examine the partnership books; and by way of affirmative defense
alleged that the amended Articles of Co-partnership did not express the true agreement
of the parties, which was that the plaintiff was not an industrial partner; that she did not
in fact contribute industry to the partnership.

ISSUE:

Whether Abad Santos is entitled to see the partnership books because she is an
industrial partner in the partnership

HELD:

Yes, Abad Santos is entitled to see the partnership books.

The Supreme Court ruled that according to

ART. 1299. Any partner shall have the right to a formal account as to partnership
affairs:

(1)If he is wrongfully excluded from the partnership business or possession of its

property by his co-partners;
(2)If the right exists under the terms of any agreement;
(3)As provided by article 1807;
(4)Whenever other circumstances render it just and reasonable."
In the case at hand, the company is estopped from denying Abad Santos as an
industrial partner because it has been 8 years and the company never corrected their
agreement in order to show their true intentions. The company never bothered to
correct those up until Abad Santos filed a complaint.
LITTON vs. HILL & CERON

Facts:
 The plaintiff sold and delivered to Carlos Ceron, who is one of the managing partners of
Hill & Ceron, a certain number of mining claims.
 Both partners have the management of the business of the partnership, and that either
may contract and sign for the partnership with the consent of the other. Ceron did not
obtain Hill’s consent for the purchase of the mining claims.
 Litton was unable to collect the balance from Hill & Ceron or from its surety.
 The trial court held Ceron personally liable for the unpaid amount. The partnership Hill &
Ceron, Robert Hill (the partner of Ceron), and the surety were absolved.
 CA affirmed, saying that Ceron did not intend to represent and did not act for the
partnership Hill & Ceron.
Issue: who should prove that the consent of the other partner is needed when entering into a
contract with third persons?
Issue: is the partnership liable?
Held: Yes.
Under article 226 of the Code of Commerce, the dissolution of a commercial association shall
not cause any prejudice to third parties until it has been recorded in the commercial registry.
(See also Cardell vs. Mañeru, 14 Phil., 368.) The Supreme Court of Spain held that the
dissolution of a partnership by the will of the partners which is not registered in the commercial
registry, does not prejudice third persons.
Third persons, like the plaintiff, are not bound in entering into a contract with any of the two
partners, to ascertain whether or not this partner with whom the transaction is made has the
consent of the other partner. The public need not make inquiries as to the agreements had
between the partners. Its knowledge is enough that it is contracting with the partnership which
is
represented by one of the managing partners.
There is a general presumption that each individual partner is an authorized agent for the firm
and that he has authority to bind the firm in carrying on the partnership transactions.
(Mills vs. Riggle, 112 Pac., 617.)
The presumption is sufficient to permit third persons to hold the firm liable on transactions
entered into by one of members of the firm acting apparently in its behalf and within the scope
of his authority. (Le Roy vs.Johnson, 7 U. S. [Law. ed.], 391.)
The kind of business in which the partnership Hill & Ceron is to engage being thus determined,
none of the two partners, under article 130 of the Code of Commerce, may legally engage in
the
business of brokerage in general as stock brokers, security brokers and other activities
pertaining to the business of the partnership. Ceron, therefore, could not have entered into the
Fernando Santos vs Spouses Arsenio and Nieves Reyes
Facts:

This is a petition for review on certiorari assailing CA decision which affirmed the RTC decision.
Santos and Nieves Reyes verbally agreed that Santos would act as financier while Nieves and Meliton
Zabat would act as solicitors for membership and collectors of loan payment. 70% of the profits
would go to Santos while Nieves and Zabat would get 15% each.

It was a lending venture business.

Nieves introduced Gragera of Monte Maria Corp, who obtained short term loans for the partnership
in consideration of commissions. In 1986, Nieves and Zabat executed an agreement which formalized
their earlier verbal agreement. But, Santis and Nieves later discovered that Zabat engaged in the same
lending business. Hence, Zabat was expelled from the partnership. On June 1987, Santos filed a
complaint for recovery of sum of money and damages against the respondents, alleging them as
employees who misappropriated the funds. Respondents assert they were partners and not mere
employees. Santos claimed that after discovery of Zabat's activities, he ceased infusing funds thereby
extinguishing the partnership.

Issue:

Whether or not the parties' relationship was one of partnership or of employer-employee

Held:

Yes they were partners. 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. The "Articles of Agreement" stipulated that the signatories shall share the profits
of the business in a 70-15-15 manner, with petitioner getting the lion's share. This stipulation clearly
proved the establishment of a partnership.

Indeed, the partnership was established to engage in a money-lending business, despite the fact that
it was formalized only after the Memorandum of Agreement had been signed by petitioner and
Gragera.
Digest: Sancho vs Lizarraga
By nutshellgirl ¶ Posted in Digest, Digest: BusOrg 1 (PAT) ¶ Leave a comment

MAXIMILIANO SANCHO, vs. SEVERIANO LIZARRAGA

G.R.No. L-33580 February 6, 1931
Subject: BusOrg 1
FACTS:
The plaintiff brought an action for the rescission of the partnership contract between
himself and the defendant and the reimbursement of his investment worth 50,000php with
interest at 12 per cent per annum form October 15, 1920, with costs, and any other just and
equitable remedy against said defendant. The defendant denies generally and specifically
all the allegations of the complaint and asked for the dissolution of the partnership, and the
payment to him as its manager and administrator P500 monthly from October 15, 1920
until the final dissolution with interest.

The CFI found that the defendant had not contributed all the capital he had bound himself
to invest hence it demanded that the defendant liquidate the partnership, declared it
dissolved on account of the expiration of the period for which it was constituted, and
ordered the defendant, as managing partner, to proceed without delay to liquidate it,
submitting to the court the result of the liquidation together with the accounts and
vouchers within the period of thirty days from receipt of notice of said judgment. The
plaintiff appealed from said decision praying for the rescission of the partnership contract
between him and the defendant in accordance with Art. 1124.

ISSUE:
WON plaintiff acquired the right to demand rescission of the partnership contract
according to article 1124 of the Civil Code.

HELD:
The SC ruled that owing to the defendant’s failure to pay to the partnership the whole
amount which he bound himself to pay, he became indebted to the partnership for the
remainder, with interest and any damages occasioned thereby, but the plaintiff did not
thereby acquire the right to demand rescission of the partnership contract according to
article 1124 of the Code. Article 1124 cannot be applied to the case in question, because it
refers to the resolution of obligations in general, whereas articles 1681 and 1682
specifically refer to the contract of partnership in particular. And it is a well known
principle that special provisions prevail over general provisions. Hence, SC dismissed the
appeal left the decision appealed from in full force.
Martinez v. Ong Pong Co

Facts:

Martinez delivered P1,500 to Ong Pong Co and Ong Lay to invest in a store. They agreed
that the profits and losses would be equally shared by all of them.

Martinez was demanding for the two Ongs to render an accounting or to refund him the
P1,500.

Ong Pong Co alleged that Ong Lay, now deceased, was the one who managed the business,
and the capital of P1,500 resulted in a loss so that he should not be made liable

Issue: WON Ong Pong Co is liable?

YES What is the extent of his liability? joint

Held:

The 2 partners (Ongs) were the administrators/managers and are obliged torender
accounting. Since neither of them rendered an account, nor proved the alleged losses,
they are obliged to return the capital to Martinez.Where two partners receive from
another a sum of money for the establishmentof a business, and agree to share with the
latter the profits or losses that mayresult therefrom, the said two persons, as the
apparent administrators of the partnership, acted as agents for th

e capitalist partner, and by virtue thereof arebound to fulfill the contract which

implies the management of the business.Article 1796 is not applicable because no ot

her money than that contributed ascapital was involved.The liability of the partners is
joint. Ong Pong Co shall onlypay P750 to Martinez.
 PARTNERSHIP DIGESTS
Lim vs. Philippine Fishing Gear Industries Inc. [GR 136448, 3 November 1999]

FACTS: Lim Tong Lim requested Peter Yao and Antonio Chuato engage in commercial fishing
with him. The three agreed to purchase two fishing boats but since they do not have the money
they borrowed from one Jesus Lim the brother of Lim Tong Lim. Subsequently, they again
borrowed money for the purchase of fishing nets and other fishing equipments. Yao and Chua
represented themselves as acting in behalf of “Ocean Quest Fishing Corporation” (OQFC) and
they contracted with Philippine Fishing Gear Industries (PFGI) for the purchase of fishing nets
amounting to more than P500k. However, they were unable to pay PFGI and hence were sued in
their own names as Ocean Quest Fishing Corporation is a non-existent corporation. Chua
admitted his liability while Lim Tong Lim refused such liability alleging that Chua and Yao acted
without his knowledge and consent in representing themselves as a corporation.

ISSUE: Whether Lim Tong Lim is liable as a partner

HELD: Yes. It is apparent from the factual milieu that the three decided to engage in a fishing
business. Moreover, their Compromise Agreement had revealed their intention to pay the loan
with the proceeds of the sale and to divide equally among them the excess or loss. The boats and
equipment used for their business entails their common fund. The contribution to such fund
need not be cash or fixed assets; it could be an intangible like credit or industry. That the parties
agreed that any loss or profit from the sale and operation of the boats would be divided equally
among them also shows that they had indeed formed a partnership. The principle of corporation
by estoppel cannot apply in the case as Lim Tong Lim also benefited from the use of the nets in
the boat, which was an asset of the partnership. Under the law on estoppel, those acting in behalf
of a corporation and those benefited by it, knowing it to be without valid existence are held liable
as general partners. Hence, the question as to whether such was legally formed for unknown
reasons is immaterial to the case.

Yes. From the factual findings of both lower courts, 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. In their Compromise Agreement, they subsequently revealed
their intention to pay the loan with the proceeds of the sale of the boats, and to divide equally
among them the excess or loss. These boats, the purchase and the repair 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.

Lim Tong Lim cannot argue that the principle of corporation by estoppels can only be imputed
to Yao and Chua. Unquestionably, Lim Tong Lim benefited from the use of the nets found in his
boats, the boat which has earlier been proven to be an asset of the partnership. Lim, Chua and
Yao decided to form a corporation. Although it was never legally formed for unknown reasons,
this fact alone does not preclude the liabilities of the three as contracting parties in
representation of it. Clearly, under the law on estoppel, those acting on behalf of a corporation
and those benefited by it, knowing it to be without valid existence, are held liable as general
partners.
ANTONIA TORRES, assisted by her husband, ANGELO TORRES; and EMETERIA BARING,
petitioners, vs. COURT OF APPEALS and MANUEL
G.R. No. 134559.
December 9, 1999
FACTS:
isters Antonia Torres and Emeteria Baring, herein 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 Manuel,
who then had it registered in his name and obtained from Equitable Bank a loan of P40,000
which, under the Joint Venture Agreement, was to be used for the development of the subdivision
through mortgage of said property. All three of them also agreed to share the proceeds from the
sale of the subdivided lots. The project failed and the property was foreclosed. Petitioner alleged
that it was due to Manuel’s ’s lack of funds or means and skills. And also alleged that the latter
misappropriate the amount loaned to his own company. On the other hand, respondent alleged
that he used the loan to implement the Agreement, which incurred P85,000 expenses. And
further avers that failure of project was due to petitioners and their relatives had separately
caused the annotations of adverse claims on the title to the land, which eventually scared away
prospective buyers, forcing him to give up on the project. Subsequently, petitioners filed a
criminal case for estafa against respondent and his wife, but were acquitted. They filed a civil
case, but was dismissed by trial court and affirmed by Court of Appeals. Hence, this petition.

ISSUE:
1. Whether the petitioners have formed partnership with the respondent and if they do, whether
or not it was void.
2. Whether or not respondent shall be held liable to the failure of the project.
HELD:
1. A reading of the terms embodied in the Agreement indubitably shows the existence of a
partnership pursuant to Article 1767 of the Civil Code, which 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.” Under the
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. There is manifestation of intent
to form 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. As noted earlier, he developed the roads, the
curbs and the gutters of the subdivision and entered into a contract to construct low-cost
housing units on the property. Respondent’s actions clearly belie 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. Further, under Art. 1773, A contract
of partnership is void, whenever immovable property is contributed thereto, if an inventory of
said property is not made, signed by the parties, and attached to the public instrument.” This
was intended primarily to protect third persons“the execution of a public instrument would be
useless if there is no inventory of the property contributed, because without its designation and
description, they cannot be subject to inscription in the Registry of Property, and their
contribution cannot prejudice third persons. This will result in fraud to those who contract with
the partnership in the belief [in] the efficacy of the guaranty in which the immovables may
consist. Thus, the contract is declared void by the law when no such inventory is made.” The
case at bar does not involve third parties who may be prejudiced.
2. 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. Verily, factual issues cannot be resolved in a petition for
review under Rule 45, as in this case. Petitioners have not alleged, not to say shown, that their
Petition constitutes one of the exceptions to this doctrine. Accordingly, we find no reversible error
in the CA's ruling that petitioners are not entitled to damages.

G.R. No. 159333 July 31, 2006

ARSENIO T. MENDIOLA, petitioner,

vs.
COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, PACIFIC FOREST
RESOURCES, PHILS., INC. and/or CELLMARK AB, respondents.

PUNO, J.:

Facts:
Petitioner Mendiola (ATM) entered into a Side Agreement with Pacfor (USA) who will set up a
representative office in the Philippines. They named said office as Pacfor Phils in which petitioner
is president. In the agreement, petitioner’s base salary and the company’s overhead expenditures
shall be borne by the representative office and shall be funded by Pacfor/ATM being equally
owned on 50-50 equity by ATM and Pacfor-USA.

The Side Agreement was later amended through a Revised Operating and Profit Sharing
Agreement where petitioner’s salary was increased. However, both agreements show that the
operational expenses will be borne by the representative office and funded by all parties “as equal
partners,” while the profits and commissions will be shared among them.

Years later, petitioner wrote Pacfor’s VP for Asia seeking confirmation of his 50% equity of Pacfor
Phils to which Pacfor’s President replied that petitioner is not a part-owner, his office being just
a representative office, a “theoretical company with the purpose of dividing the income 50-50.”
He even stressed that the petitioner knew of this arrangement from beginning, having been the
one to propose to them the setting up of a representative office, instead of a branch office, to save
on taxes.

Issue:
Whether or not a partnership or co-ownership exists between the parties.

Held:
Petitioner is an employee of Pacfor and no partnership or co-ownership exists between the
parties.

In a partnership, the members become co-owners of what is contributed to the firm capital and
of all property that may be acquired thereby and through the efforts of the members. The property
or stock of the partnership forms a community of goods, a common fund, in which each party
has a proprietary interest. In fact, the New Civil Code regards a partner as a co-owner of specific
partnership property. Each partner possesses a joint interest in the whole of partnership
property. If the relation does not have this feature, it is not one of partnership.
This essential element, the community of interest, or co-ownership of, or joint interest in
partnership property is absent in the relations between petitioner and private respondent Pacfor.
Petitioner is not a part-owner of Pacfor Phils. Pacfor's President established this fact when he
said that Pacfor Phils. is simply a "theoretical company" for the purpose of dividing the income
50-50. He stressed that petitioner knew of this arrangement from the very start, having been the
one to propose to private respondent Pacfor the setting up of a representative office, and "not a
branch office" in the Philippines to save on taxes. Thus, the parties in this case, merely shared
profits. This alone does not make a partnership.

Besides, a corporation cannot become a member of a partnership in the absence of express

authorization by statute or charter. This doctrine is based on the following considerations: (1)
that the mutual agency between the partners, whereby the corporation would be bound by the
acts of persons who are not its duly appointed and authorized agents and officers, would be
inconsistent with the policy of the law that the corporation shall manage its own affairs
separately and exclusively; and, (2) that such an arrangement would improperly allow corporate
property to become subject to risks not contemplated by the stockholders when they originally
invested in the corporation. No such authorization has been proved in the case at bar.

MARJORIE TOCAO and WILLIAM T. BELO vs. CA and NENITA A. ANAY

342 SCRA 20

FACTS:

Private respondent Nenita A. Anay 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

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

The parties agreed that Belo's name should not appear in any documents relating to their
transactions with West Bend Company. Anay having secured the distributorship of cookware
products from the West Bend Company and organized the administrative staff and the sales
force, the cookware business took off successfully. They operated under the name of Geminesse
Enterprise, a sole proprietorship registered in Marjorie Tocao's name.

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 Belo's assurances that he was sincere, dependable and honest when it came
to financial commitments.
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.
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 P 13,300,360.00.

On April 5, 1988, Nenita A. Anay filed Civil Case No. 88-509, a complaint for sum of money with
damages against Marjorie D. Tocao and William Belo before the Regional Trial Court of Makati,
Branch 140

The trial court held that there was indeed an "oral partnership agreement between the plaintiff
and the defendants. The Court of Appeals affirmed the lower court’s decision.

ISSUE:
Whether or not there is a partnership.
RULING:
Yes, even though it was not reduced to writing, for a partnership can be instituted in any
form. The fact that it was registered as a sole proprietorship is of no moment for such registration
was only for the company’s trade name.
Anay was not even an employee because when they ventured into the agreement, they explicitly
agreed to profit sharing this is even though Anay was receiving commissions because this is only
incidental to her efforts as a head marketer.
The Supreme Court also noted that a partner who is excluded wrongfully from a partnership is
an innocent partner. Hence, the guilty partner must give him his due upon the dissolution of the
partnership as well as damages or share in the profits “realized from the appropriation of the
partnership business and goodwill.” An innocent partner thus possesses “pecuniary interest in
every existing contract that was incomplete and in the trade name of the co-partnership and
assets at the time he was wrongfully expelled.”
An unjustified dissolution by a partner can subject him to action for damages because by the
mutual agency that arises in a partnership, the doctrine of delectus personaeallows the partners
to have the power, although not necessarily the right to dissolve the partnership.
Tocao’s unilateral exclusion of Anay from the partnership is shown by her memo to the Cubao
office plainly stating that Anay was, as of October 9, 1987, no longer the vice-president for sales
of Geminesse Enterprise. By that memo, petitioner Tocao effected her own withdrawal from the
partnership and considered herself as having ceased to be associated with the partnership in the
carrying on of the business. Nevertheless, the partnership was not terminated thereby; it
continues until the winding up of the business.
Motion for Reconsideration filed by Tocao and Belo decided by the SC on September 20,
2001.

Belo is not a partner. Anay was not able to prove that Belo in fact received profits from
the company. Belo merely acted as a guarantor. His participation in the business meetings was
not as a partner but as a guarantor. He in fact had only limited partnership. Tocao also testified
that Belo received nothing from the profits. The Supreme Court also noted that the partnership
was yet to be registered in the Securities and Exchange Commission. As such, it was
understandable that Belo, who was after all petitioner Tocao’s good friend and confidante, would
occasionally participate in the affairs of the business, although never in a formal or official
capacity.

HOMEOWNERS SAVINGS & LOAN BANK vs. MIGUELA C. DAILO

NOVEMBER 11, 2010 ~ VBDIAZ
HOMEOWNERS SAVINGS & LOAN BANK vs. MIGUELA C. DAILO,
G.R. No. 153802
March 11, 2005
FACTS:
Miguela Dailo and Marcelino Dailo, Jr were married on August 8, 1967. During their marriage
the spouses purchased a house and lot situated at San Pablo City from a certain Dalida. The
subject property was declared for tax assessment purposes The Deed of Absolute Sale, however,
was executed only in favor of the late Marcelino Dailo, Jr. as vendee thereof to the exclusion
of his wife.
Marcelino Dailo, Jr. executed a Special Power of Attorney (SPA) in favor of one Gesmundo,
authorizing the latter to obtain a loan from petitioner Homeowners Savings and Loan Bank to be
secured by the spouses Dailo’s house and lot in San Pablo City. Pursuant to the SPA, Gesmundo
obtained a loan from petitioner. As security therefor, Gesmundo executed on the same day a Real
Estate Mortgage constituted on the subject property in favor of petitioner. The abovementioned
transactions, including the execution of the SPA in favor of Gesmundo, took place without the
knowledge and consent of respondent.[
Upon maturity, the loan remained outstanding. As a result, petitioner instituted extrajudicial
foreclosure proceedings on the mortgaged property. After the extrajudicial sale thereof, a
Certificate of Sale was issued in favor of petitioner as the highest bidder. After the lapse of one
year without the property being redeemed, petitioner consolidated the ownership thereof by
executing an Affidavit of Consolidation of Ownership and a Deed of Absolute Sale.

In the meantime, Marcelino Dailo, Jr. died. In one of her visits to the subject property, Miguela
learned that petitioner had already employed a certain Brion to clean its premises and that her
car, a Ford sedan, was razed because Brion allowed a boy to play with fire within the premises.

Claiming that she had no knowledge of the mortgage constituted on the subject property, which
was conjugal in nature, respondent instituted with the RTC San Pablo City a Civil Case for Nullity
of Real Estate Mortgage and Certificate of Sale, Affidavit of Consolidation of Ownership, Deed of
Sale, Reconveyance with Prayer for Preliminary Injunction and Damages against petitioner. In the
latter’s Answer with Counterclaim, petitioner prayed for the dismissal of the complaint on the
ground that the property in question was the exclusive property of the late Marcelino Dailo, Jr.
After trial on the merits, the trial court rendered a Decision declaring the said documents null
and void and further ordered the defendant is ordered to reconvey the property subject of this
complaint to the plaintiff, to pay the plaintiff the sum representing the value of the car which
was burned, the attorney’s fees, moral and exemplary damages.
The appellate court affirmed the trial court’s Decision, but deleted the award for damages and
attorney’s fees for lack of basis. Hence, this petition

ISSUE:

1. WON THE MORTGAGE CONSTITUTED BY THE LATE MARCELINO DAILO, JR. ON THE
SUBJECT PROPERTY AS CO-OWNER THEREOF IS VALID AS TO HIS UNDIVIDED SHARE.

2. WON THE CONJUGAL PARTNERSHIP IS LIABLE FOR THE PAYMENT OF THE LOAN
OBTAINED BY THE LATE MARCELINO DAILO, JR. THE SAME HAVING REDOUNDED TO THE
BENEFIT OF THE FAMILY.

HELD: the petition is denied.

1. NO. Article 124 of the Family Code provides in part:

ART. 124. The administration and enjoyment of the conjugal partnership property shall belong
to both spouses jointly. . . .

In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include the powers of disposition or encumbrance which
must have the authority of the court or the written consent of the other spouse. In the absence
of such authority or consent, the disposition or encumbrance shall be void. . . .

In applying Article 124 of the Family Code, this Court declared that the absence of the consent
of one renders the entire sale null and void, including the portion of the conjugal property
pertaining to the husband who contracted the sale.

Respondent and the late Marcelino. were married on August 8, 1967. In the absence of a marriage
settlement, the system of relative community or conjugal partnership of gains governed the
property relations between respondent and her late husband. With the effectivity of the Family
Code on August 3, 1988, Chapter 4 on Conjugal Partnership of Gains in the Family Code
was made applicable to conjugal partnership of gains already established before its
effectivity unless vested rights have already been acquired under the Civil Code or other laws.
The rules on co-ownership do not even apply to the property relations of respondent and the late
Marcelino even in a suppletory manner. The regime of conjugal partnership of gains is a
special type of partnership, where the husband and wife place in a common fund the proceeds,
products, fruits and income from their separate properties and those acquired by either or both
spouses through their efforts or by chance. Unlike the absolute community of property wherein
the rules on co-ownership apply in a suppletory manner, the conjugal partnership shall be
governed by the rules on contract of partnership in all that is not in conflict with what is expressly
determined in the chapter (on conjugal partnership of gains) or by the spouses in their marriage
settlements. Thus, the property relations of respondent and her late husband shall be governed,
foremost, by Chapter 4 on Conjugal Partnership of Gains of the Family Code and, suppletorily,
by the rules on partnership under the Civil Code. In case of conflict, the former prevails because
the Civil Code provisions on partnership apply only when the Family Code is silent on the matter.
The basic and established fact is that during his lifetime, without the knowledge and consent of
his wife, Marcelino constituted a real estate mortgage on the subject property, which formed part
of their conjugal partnership. By express provision of Article 124 of the Family Code, in the
absence of (court) authority or written consent of the other spouse, any disposition or
encumbrance of the conjugal property shall be void.

The aforequoted provision does not qualify with respect to the share of the spouse who makes
the disposition or encumbrance in the same manner that the rule on co-ownership under Article
493 of the Civil Code does. Where the law does not distinguish, courts should not
distinguish. Thus, both the trial court and the appellate court are correct in declaring the nullity
of the real estate mortgage on the subject property for lack of respondent’s consent.
2. NO. Under Article 121 of the Family Code, “[T]he conjugal partnership shall be liable for: . . .

(1) Debts and obligations contracted by either spouse without the consent of the other to the
extent that the family may have been benefited; . . . .”

Certainly, to make a conjugal partnership respond for a liability that should appertain to the
husband alone is to defeat and frustrate the avowed objective of the new Civil Code to show the
utmost concern for the solidarity and well-being of the family as a unit.[
The burden of proof that the debt was contracted for the benefit of the conjugal partnership of
gains lies with the creditor-party litigant claiming as such. Ei incumbit probatio qui dicit, non qui
negat(he who asserts, not he who denies, must prove). Petitioner’s sweeping conclusion that the
loan obtained by the late Marcelino to finance the construction of housing units without a doubt
redounded to the benefit of his family, without adducing adequate proof, does not persuade this
Court. Consequently, the conjugal partnership cannot be held liable for the payment of the
principal obligation.

NOTES:
In addition, a perusal of the records of the case reveals that during the trial, petitioner vigorously
asserted that the subject property was the exclusive property of the late Marcelino Dailo, Jr.
Nowhere in the answer filed with the trial court was it alleged that the proceeds of the loan
redounded to the benefit of the family. Even on appeal, petitioner never claimed that the family
benefited from the proceeds of the loan. When a party adopts a certain theory in the court below,
he will not be permitted to change his theory on appeal, for to permit him to do so would not
only be unfair to the other party but it would also be offensive to the basic rules of fair play,
justice and due process. A party may change his legal theory on appeal only when the factual
bases thereof would not require presentation of any further evidence by the adverse party in
order to enable it to properly meet the issue raised in the new theory.
HEIRS OF TAN ENG KEE vs.CA 341 SCRA 740, G.R. No. 126881, October 3, 2000

FACTS:

After the second World War, Tan EngKee and Tan Eng Lay, pooling their resources and industry
together, entered into a partnership engaged in the business of selling lumber and hardware and
construction supplies. They named their enterprise "Benguet Lumber" which they jointly
managed until Tan EngKee's death. Petitioners herein averred that the business prospered due
to the hard work and thrift of the alleged partners. However, they claimed that in 1981, Tan Eng
Lay and his children caused the conversion of the partnership "Benguet Lumber" into a
corporation called "Benguet Lumber Company." The incorporation was purportedly a ruse to
deprive Tan EngKee and his heirs of their rightful participation in the profits of the business.
Petitioners prayed for accounting of the partnership assets, and the dissolution, winding up and
liquidation thereof, and the equal division of the net assets of Benguet Lumber. The RTC ruled
in favor of petitioners, declaring that Benguet Lumber is a joint venture which is akin to a
particular partnership. The Court of Appeals rendered the assailed decision reversing the
judgment of the trial court.

ISSUE: Whether the deceased Tan EngKee and Tan Eng Lay are joint adventurers and/or
partners in a business venture and/or particular partnership called Benguet Lumber and as
such should share in the profits and/or losses of the business venture or particular partnership

RULING:

There was no partnership whatsoever. Except for a firm name, there was no firm account, no
firm letterheads submitted as evidence, no certificate of partnership, no agreement as to profits
and losses, and no time fixed for the duration of the partnership. There was even no attempt to
submit an accounting corresponding to the period after the war until Kee's death in 1984. It had
no business book, no written account nor any memorandum for that matter and no license
mentioning the existence of a partnership. Also, the trial court determined that Tan EngKee and
Tan Eng Lay had entered into a joint venture, which it said is akin to a particular partnership.
A particular partnership is distinguished from a joint adventure, to wit:(a) A joint adventure (an
American concept similar to our joint accounts) is a sort of informal partnership, with no firm
name and no legal personality. In a joint account, the participating merchants can transact
business under their own name, and can be individually liable therefor. (b) Usually, but not
necessarily a joint adventure is limited to a SINGLE TRANSACTION, although the business of
pursuing to a successful termination maycontinue for a number of years; a partnership generally
relates to a continuing business of various transactions of a certain kind. A joint venture
"presupposes generally a parity of standing between the joint co-ventures or partners, in which
each party has an equal proprietary interest in the capital or property contributed, and where
each party exercises equal rights in the conduct of the business. The evidence presented by
petitioners falls short of the quantum of proof required to establish a partnership. In the absence
of evidence, we cannot accept as an established fact that Tan EngKee allegedly contributed his
resources to a common fund for the purpose of establishing a partnership. Besides, it is indeed
odd, if not unnatural, that despite the forty years the partnership was allegedly in existence, Tan
EngKee never asked for an accounting. The essence of a partnership is that the partners share
in the profits and losses .Each has the right to demand an accounting as long as the partnership
exists. A demand for periodic accounting is evidence of a partnership. During his lifetime, Tan
EngKee appeared never to have made any such demand for accounting from his brother, Tang
Eng Lay. We conclude that Tan EngKee was only an employee, not a partner since they did not
present and offer evidence that would show that Tan EngKee received amounts of money
allegedly representing his share in the profits of the enterprise. There being no partnership, it
follows that there is no dissolution, winding up or liquidation to speak o

D. CONTRACTUAL REQUISITES

- DELUAO VS CASTEEL

- Casteel was the original occupant and applicant of a fishpond area since before the last
World War. He wanted to preclude subsequent applicants from entering and spreading
themselves within the area by expanding his occupation thereof by the construction of
dikes and the cultivation of marketable fishes.

- Thus, he borrowed P27, 000 from the Deluaos to finance needed improvements for the
fishpond, and was compelled by force of this circumstance to enter into the contract of
partnership, with an agreement to divide the fishpond after the award. Eventually,
Casteel administered the said property and single-handedly opposed rival applicants who
 occupied portions of the fishpond area. He relentlessly pursued his claim to the said area
up to the Office of the DANR Secretary, until it was finally awarded to him.

Issue: WON the parties can now validly divide the said fishpond as agreed upon by them? NO.
Ruling:

- Spouses Deluaos’ statement that the beneficial right over the fishpond in question is the
"specific partnership property" contemplated by art. 1811 of the Civil Code is
incorrect. A reading of the said provision will show that what is meant is tangible property,
such as a car, truck or a piece of land, but not an intangible thing such as the beneficial
right to a fishpond. If what they have in mind is the fishpond itself, they are grossly in
error. A fishpond of the public domain can never be considered a specific partnership
property because only its use and enjoyment — never its title or ownership — is granted
to specific private persons.
- Since we held as illegal the second part of the contract of partnership between the parties
to divide the fishpond between them after the award, a fortiori, no rights or obligations
could have arisen therefrom. Inescapably, no trust could have resulted because trust is
founded on equity and can never result from an act violative of the law. Art. 1452 of the
Civil Code does not support the appellees' stand because it contemplates an agreement
between two or more persons to purchase property — capable of private ownership — the
legal title of which is to be taken in the name of one of them for the benefit of all. In the
case at bar, the parties did not agree to purchase the fishpond, and even if they did, such
is prohibited by law, a fishpond of the public domain not being susceptible of private
ownership.

- It must be observed that, despite the decisions of the DANR Secretary in DANR cases 353
and 353-B awarding the area to Casteel, and despite the latter's proposal that they divide
the fishpond between them, the Deluaos unequivocally expressed in their aforequoted
letter their decision not to share the fishpond with Casteel. This produced the dissolution
of the entire contract of partnership (to jointly administer and to divide the fishpond after
the award) between the parties, not to mention its automatic dissolution for being
contrary to law.
- Pettioner’s final proposition that only by giving effect to the confirmed intention of the
parties may the cause of equity and justice be served, we must state that since the
contract of service is contrary to law and, therefore, null and void, it is not and can never
be considered as the law between the parties.

FACTS:

Nicanor Casteel filed a fishpond application for a big tract of swampy land in the then Sitio of
Malalag(now the Municipality of Malalag), Municipality of Padada, Davao for three times since
1940 but no action was taken thereon by the authorities concerned. Despite the said rejection,
Casteel did not lose interest. Meanwhile, several applications were submitted by other persons
for portions of the area covered by Casteel's application, one of them was Felipe Deluao, uncle of
Casteel. Because of the threat poised upon his position by the above applicants who entered
upon and spread themselves within the area, Casteel sought financial aid from his uncle Deluao
with which to finance the needed improvements on the fishpond. Hence, a wide productive
fishpond was built. But despite the improvements introduced, Casteel’s application was still
rejected. He then appealed the rejection made with the Secretary of Agriculture and Natural
Resources. Pending appeal, Inocencia Deluao (wife of Felipe Deluao) and Nicanor Casteel
executed a contract denominated as “contract of service” whereby Deluao hires and employs the
Casteel. The latter will be the Manager and sole buyer of all the produce of the fish that will be
produced from said fishpond while the former will be the administrator of the same she having
financed the construction and improvement of said fishpond. At the same time, Inocencia Deluao
executed a special power of attorney in favor of Jesus Donesa, extending to the latter the
authority to represent her in the administration of the fishpond. Meanwhile, the Secretary of
Agriculture and Natural Resources issued a decision stating that Nicanor Casteel should be, as
hereby it is, reinstated and given due course for the area applied for. Nicanor Casteel then
forbade Inocencia Deluao from further administering the fishpond, and ejected the
latter's representative, Donesa, from the premises. Alleging violation of the contract of service
entered into between Deluao and Casteel, Deluao filed an action in the CFI for specific
performance and damages against Casteel and one Juan Depra (who, they alleged, instigated
Casteel to violate his contract).

ISSUES:

1) Whether the agreement made by the parties created a contract of co-ownership or partnership.

2) Whether the reinstatement of Casteel over the subject land constitute a dissolution of
thepartnership between him and Deluao.

HELD:

1 The evidence preponderates in favor of the view that the initial intention of the parties was not
to form aco-ownership but to establish a partnership — Inocencia Deluao as capitalist partner
and Casteel asindustrial partner — the ultimate undertaking of which was to divide into two
equal parts such portion ofthe fishpond as might have been developed by the amount extended
by the plaintiffs-appellees, with thefurther provision that Casteel should reimburse the expenses
incurred by the appellees over one-half ofthe fishpond that would pertain to him. This can be
gleaned, among others, from the letter of Casteel toFelipe Deluao showing the intention to divide
the fishpond.

2 On the second issue, the Supreme Court ruled that the arrangement under the so-called
"contract ofservice" continued until the decision issued by the Secretary of Agriculture and
Natural Resources. Thisdevelopment, by itself, brought about the dissolution of the partnership.
Since the partnership had for itsobject the division into two equal parts of the fishpond between
the appellees and the appellant after itshall have been awarded to the latter, and therefore it
envisaged the unauthorized transfer of one halfthereof to parties other than the applicant
Casteel, it was dissolved by the approval of his application andthe award to him of the fishpond

E. KINDS OF PARTNERSHIP
Moran, Jr. v. CA
G.R. No. L-59956 Oct. 31, 1984
Justice Gutierrez, Jr.
Facts:

 Pecson and Moran entered into an agreement for the printing of posters featuring the
delegates of the 1971 Constitutional Convention
o That 95k posters were supposed to be printed and sold at P2/each
o That each would contribute P15k
o That Moran will supervise the work, while Pecson would receive a P1k monthly
commission
 Pecson gave Moran P10k for which the latter issued a receipt
 Only 2k posters were printed, but each was sold for P5
o Moran then executed 2 promissory notes in favor of Pecson
  Pecson then filed an action for the recovery of a sum of money for the return of his P10k
contribution, payment of his share in the profits that the partnership would have
earned
 TC: each party is entitled to rescind the contract since both failed to fulfill their
respective promises (Moran – the printing of the 95k posters; Pecson – the P15k
contribution)
 CA: Moran must pay Pecson, among others, the amount of expected profits and the
latter’s commission in the partnership

Issue:

 WON Moran is obliged to give Pecson the amount of expected profits from their
partnership.

Held:

 No, he is not.
 Rule: when a partner who has undertaken to contribute a sum of money fails to do so,
he becomes a debtor of the partnership for whatever he may have promised to
contribute (Art. 1786) and for interests and damages from the time he should have
complied with his obligations (Art. 1788)
 Being a contract of partnership, each partner must share in the profits and losses of the
venture, for that is the essence of partnership.
o Even in the assurance of the other partner that they would earn a huge amount
of profits, in the absence of fraud, the other cannot claim a right to recover the
highly speculative profits
o In the present case, the fantastic nature of expected profits is obvious that
various factors need to be considered
o The failure of COMELEC to proclaim all 320 candidates of the Constitutional
Convention on time was a major factor in Moran’s decision not to go on with the
printing of all 95,000 posters
o Hidden risks in any business venture have to be considered
 However, as it was shown that Pecson gave money to Moran (P10k) which the latter
used to print the first batch of posters, and since these posters were sold and profits
were realized from such sale, Pecson is entitled to recover his share of such profits
Lozana vs. Depakakibo
Case Digest
FACTS:
Lozana and Depakakibo established a partnership for the purpose of maintaining,
operating, and distributing electric light and power in the Municipality of Dumangas. The
partnership is capitalized at the sum of P30, 000.00 where Lozana agreed to furnish 60%
while Depakakibo, 40%. However, the franchise for venture in favor of Buenaflor was
cancelled and revoked by the Public Service Commission. Lozana thereafter sold
Generator Buda [Lozana’s contribution to the partnership; no liquidation made] to
Decologon. When the decision was appealed, a temporary certificate of public convenience
was issued in the name of Decolongon. Depakakibo sold one Crossly Diesel Engine
[Depakakibo
’
s contribution to the partnership] to Spouses Jimenea and Harder. Lozana brought action
against Depakakibo alleging the latter wrongfully detained the Generator Buda and
wooden posts to which he is entitled to the possession of. Lozano prayed the properties
be delivered back to him. CFI ordered sheriff to take possession of the properties and the
delivery thereof to Lozano. Depakakibo alleged properties have been contributed to the
partnership and therefor he is not unlawfully detaining them. In addition, Lozano sold
his contribution to partnership in violation of terms of their agreement. CFI declared
 Lozano owner of and entitled to the equipment. Depakakibo appealed decision to the
Supreme Court.

ISSUE:
W/N partnership is void or the act of the partnership in furnishing electric current to
the franchise holder without previous approval of Public Service Commission render the
partnership void? W/N disposal of contribution of parties is allowed.

RULING:

Validity of the Partnership

. Partnership is valid. The fact of furnishing the current to the holder of the franchise
alone, without the previous approval of the Public Service Commission, does not per se
make the contract of partnership null and void from the beginning and render the
partnership entered into by the parties for the purpose also void and non-existent
Disposal of Contributed Property to the Partnership.
Facts show that parties entered into the contract of partnership, Lozana contributing the
amount of P18, 000, and there has not been liquidation prior to the sale of the contributed
properties: Buda Diesel Engine and 70 posts. It necessarily follows that the Buda diesel
engine contributed by the plaintiff had become the property of the partnership. As
properties of the partnership, the same could not be disposed of by the party contributing
the same without the consent or approval of the partnership or of the other partner.
(Clemente vs. Galvan, 67 Phil., 565

Uy Vs. Puzon

Socialize Us

Facts:
 Bartolome Puzon had two contracts with the government for the construction of roads
and bridges. (Bureau of Public Highways)
 He sought the financial assistance of William Uy, so he proposed that they create a
partnership which would be the sub-contractor of the projects.
 They also agreed that the profits will be divided among themselves.
 William Uy agreed to the formation of the partnership "U.P. Construction Company". They
agreed to contribute P50,000 each. (Note: P40,000 was advanced by William Uy while
Puzon was waiting for the approval of his P150,000 PNB Loan. Upon release of the loan,
he promised to reimburse William Uy of the P40,000; pay his share of P50,000 and loan
P60,000 to the partnership).
 Loan was approved by November 1956. Note: At the end of 1957, Uy contributed a total of
P115,
 The partnership agreement was signed in 1957 (January 18) although the work for the
projects began as early as 1956 (October 1).
 Since Puzon was busy with other projects, Uy was the one who managed the partnership.
 In order to guarantee the PNB Loan, Puzon, without the knowledge of Uy, assigned the
payments to the payments to be received from the projects to PNB.
 Due to the financial demands of the projects, Uy demanded that Puzon comply with his
obligation to place his capital contribution in the company.
 However, Puzon failed to comply even after formal demand letters were sent to him.
 Thereafter, Puzon (as the primary contractor of the projects) wrote terminated the
subcontract agreement with the partnership to which he is also a partner. (November 27,
1957)
  Thereafter, Uy was not allowed to hold office in the UP Construction Company and his
authority to negotiate with the Bureau was revoked by Puzon.
 Uy clamied that Puzon had violated the terms of their partnership agreement. He sought
for the dissolution of the partnership with damages.
 The lower court ruled in favor of Uy.

Issue: WON Puzon failed to comply with his obligation of paying the capital contribution to the
company. YES

Ruling: YES
According to the court, there was failure on the part of Puzon to contribute capital to the
partnership. When his load with PNB was approved, he only gave P60,000 to Uy; P40,000 was
for reimbursement to the payments made by Uy and the other P20,000 was for the capital
contribution. Thereafter, Puzon never made additional contribution.
Also, it was found by the SC that Puzon misapplied partnership funds by assigning all payments
for the projects to PNB.
Such assignment was prejudicial to the partnership since the partnership only received a small
share from the total payments made by the Bureau of Public Highways. As a result, the
partnership was unable to discharge its obligations.
Here, the Court ordered Puzon to reimburse whatever amount Uy had invested in or spent for
the partnership on account of construction projects. The amount P200,000 as compensatory
damages was also awarded in favor of Uy.
RULING:
Had the appellant not been remiss in his obligations as partner and as prime contractor of the
construction projects in question as he was bound to perform pursuant to the partnership and
subcontract agreements, and considering the fact that the total contract amount of these two
projects is P2,327,335.76, it is reasonable to expect that the partnership would have earned
much more than the P334,255.61 We have hereinabove indicated. The award, therefore, made
by the trial court of the amount of P200,000.00, as compensatory damages, is not speculative,
but based on reasonable estimate.

WHEREFORE, finding no error in the decision appealed from, the said decision is hereby
affirmed with costs against the appellant, it being understood that the liability mentioned herein
shall be home by the estate of the deceased Bartolome Puzon, represented in this instance by
the administrator thereof, Franco Puzon.

Hanlon vs. Haussermann and Beam

Facts:
This action was originally instituted by R. Y. Hanlon to compel the defendants, John W.
Haussermann and A. W. Beam, to account for a share of the profits gained by them in
rehabilitating the plant of the Benguet Consolidated Mining Company and in particular to compel
them to surrender to the plaintiff 50,000 shares of the stock of said company, with dividends
paid thereon.

It was initially agreed by Hanlon, Haussermann, Beam and Sellner that P75,000.00 was needed
to rehabilitate the mine; P50,000.00 would come from Hanlon by securing and obtaining
subscriptions for the company’s stocks, P25,000.00 would come from Haussermann and Beam.
They were to receive compensation in the form of shares of stock for the services rendered in the
flotation of this proposition. The funds were needed on a certain date. It was also stated in the
contract that Haussermann and Beam would be discharged if Sellner could not provide the
amount due from him within the time frame stipulated.

Hanlon was unable to raise the P75,000.00, so that Haussermann and Beam made arrangements
to finance the rehabilitation of the mine. Because of this new arrangement, the company became
profitable that it was able to pay dividends. Because of this, the value of the company’s stocks
appreciated.

Issue:
W/on Hanlon is entitled to an accounting for his share in the profits of the company

Held:

Hanlon is not entitled to an accounting for his share in the profits of the company; Haussermann
and Beam are absolved.

Under the equitable doctrine, if the contracting parties have treated time as of the essence of the
contract, the delinquency will not be excused and specific performance will not be granted; but
on the other hand, if it appears that time has not been made of the essence of the contract, equity
will relieve from the delinquency and specific performance may be granted, due compensation
being made for the damage caused by the delay.
Time is of the essence of the contract for the sale of an option on mining property, or a contract
for the sale thereof, even though there is no express stipulation to that effect. The same idea is
clearly applicable to a contract like that now under consideration which provides for the
rehabilitation of a mining plant with funds to be supplied by the contractor within a limited
period.
_______________________

Lim Tanhu v. Ramolete

G.R. No. L-40098, 29 August 1975

FACTS:

Private respondent Tan Put alleged that she is the widow of Tee Hoon Lim Po Chuan, who
was a partner in the commercial partnership, glory commercial company with Antonio
Lim Tanhu and Alfonso Ng Sua’’. Defendants Antonio Lim Tan Hu, Alfonso Leonardo Ng
Sua, Lim Teck Chuan, and Eng Chong Leonardo, through fraud and conspiracy, took
actual and active management of the partnership and although tee Hoon Lim Po Chuan
was the manager of glory commercial company, defendants managed to use the funds of
the partnership to purchase lands and building in the cities of Cebu, Lapu-Lapu,
Mandaue, and the municipalities of Talisay and Minglanilla.

She alleged in her complaint that at the time of death of Tee Hoon Lim Po Chuan, the
defendants, without liquidation, continued the business of glory commercial company,
by purportedly organizing a corporation known as the glory commercial company,
incorporated and sometime in the month of November, 1967, defendants, particularly
Antonio Lim Tan Hu, by means of fraud deceit, and misrepresentations did then and
there , induce and convince her to execute a quitclaim of all her rights and interests, in
the assets of the partnership of glory commercial company.
Thereafter, in the year 1968-69, the defendants who had earlier promised to liquidate the
aforesaid properties and assets in favor, among others of plaintiff and until the middle of
the year 1970 when the plaintiff formally demanded from the defendants the accounting
of real and personal properties of glory commercial company, defendants refused and
stated that they would not give the share of the plaintiff.

ISSUE:

Whether Tan Put has right over the liquidated properties of the partnership.

RULING:

Tan has a right over the liquidated properties of partnership. The supreme court hold
that there is no alternative but to hold that plaintiff Tan Put’s allegation that she is the
widow of Tee Hoon Lim Po Chuan has not been satisfactorily established and that, on the
contrary, the evidence on record convincingly shows that her relation with said deceased
was that of common-law wife. Moreover, the Supreme Court said that the lower courts
committed an error by awarding 1/3 of the partnership properties to Tan because there
has been no liquidation proceedings yet. And if there has not been any liquidation of the
partnership, the only rights plaintiff could have would be to what might result after much
liquidation to belong to the deceased partner (her alleged husband) and before this is
finished, it is impossible to determine, what rights or interest, if any the deceased had.
In other words no specific amounts or properties may be adjudicated to the heir or legal
representative of the deceased partner without the liquidation being first terminated.

Under Article 55 of the Civil Code, the declaration of the contracting parties that they
take each other as husband and wife “shall be set forth in an instrument” signed by the
parties as well as by their witnesses and the person solemnizing the marriage.
Accordingly, the primary evidence of a marriage must be an authentic copy of the
marriage contract. While a marriage may also be proved by other competent evidence, the
absence of the contract must first be satisfactory explained. Surely, the certification of
the person who allegedly solemnized a marriage is not admissible evidence of such
marriage unless proof of loss of the contract or of any other satisfactory reason for its
non-production is first presented to the court.

In the case at bar, the purported certification issued by a Mons. Jose M. Recoleto,
Philippine Independent Church, Cebu City, is not, therefore, competent evidence, there
being absolutely no showing as to unavailability of the marriage contract and, indeed, as
to the authenticity of the signature of said certifies, the jurat allegedly signed by a second
assistant provincial fiscal not being authorized by law, since it is not part of the functions
of his office. Besides, inasmuch as the bishop did not testify, the same is hearsay. As
regards the testimony of the plaintiff herself on the same point and that of her witness
Antonio Nuñez, there can be no question that they are both self-serving and of very little
evidently value, it having been disclosed at the trial that plaintiff has already assigned all
her rights in this case to said Nuñez, thereby making him the real party in interest here
and, therefore, naturally as biased as herself. Besides, in the portion of the testimony of
Nuñez copied in Annex C of petitioner’s memorandum, it appears admitted that he was
born only on March 25, 1942, which means that he was less than eight years old at the
supposed time of the alleged marriage. If for this reason alone, it is extremely doubtful if
he could have sufficiently aware of such event as to be competent to testify about it.
DAN FUE LEUNG VS IAC and LEUNG YIU

FACTS:
 Dan Fue Leung.The Sun Wah Panciteria 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.Lower court ruled in favor of the
private respondent. Petitioner appealed the trial court's amended decision. However,the
questioned decision was further modified and affirmed by the appellate court.

Both the trial court and the appellate court declared that the private petitioner is a
partner and is entitled to a share of the annual profits of the restaurant. Hence, an appeal
to the SC.The petitioner argues that private respondent extended 'financial assistance' to
herein petitioner at the time of the establishment of the Sun Wah Panciteria, in return of
which private respondent allegedly will receive a share in the profits of the restaurant. It
was, therefore, error for the Appellate Court to interpretor construe 'financial assistance'
to mean the contribution of capital by a partner to a partnership.

ISSUE:

WON the private respondent is a partner of the petitioner in the establishment of Sun
Wah Panciteria.

HELD:

In essence, the private respondent alleged that when Sun Wah Panciteria was established, he
gave P4,000.00 to the petitioner with the understanding that he would be entitled to twenty-two
percent (22%) of the annual profit derived from the operation of the said panciteria. These
allegations, which were proved, make the private respondent and the petitioner partners in the
establishment of Sun Wah Panciteria because Article 1767 of the Civil Code provides that"By the
contract of partnership two or more persons bind themselves to contribute money, property or
industry to a common fund, with the intention of dividing the profits among themselves".
Therefore, the lower courts did not err in construing the complaint as one wherein the private
respondent asserted his rights as partner of the petitioner in the establishment of the Sun Wah
Panciteria, notwithstanding the use of the term financial assistance therein.SC affirmed
appellate court's decision and ordered the dissolution of the partnership