CASE DIGEST

22 Uy v Puzon
Not Sycip
Agency

Prepared by Anton Leron

Court Second Division

Citation G.R. No. L-19819

Date October 26, 1977

Plaintiff William Uy

Respondent Bartolome Puzon, substituted by Franco Puzon

Relevant topic ● Heading: Articles 1784 to 1809

● NCC Article/s: No articles explicitly cited in the case, but Article 1788 is relevant

Short Summary of the Puzon and Uy started a co-partnership for a construction contract with the BPH. In order
case (max 5 to get a loan and thus contribute his share of the capital invesment, Puzon had to borrow
sentences) money from Uy to first pay off his collaterals. Despite acquiring the loan, Puzon still failed
to contribute his share of the capital and, even worse, applied the proceeds of his
partnership to paying off his loan. When Uy tried to convince Puzon to contribute his
capital share, the former was ousted from managing the partnership thus the present
case. The court ruled that Puzon had breached his contract by violating the terms of their
partnership, misappropriating its funds, and ousting Uy from management.

RELEVANT CHARACTERS (please use if there are several persons involved in the case):
Full Name Character Description

Bartolome Puzon Co-partner; convinced Uy to start the

partnership

William Uy Co-partner

FACTS:

 Bartolome Puzon had a contract with the Bureau of Public Highways (BPH) for the construction of the
Ganyangan-Bato Section of the Pagadian-Zamboanga City Road, province of Zamboanga del Sur and
of 5 bridges in the Malangas-Ganyangan Road
 Due to difficulty accomplishing the projects, Puzon sought financial assistance from William Uy and convinced
the latter to form a partnership, which would be the subcontractor of the projects, and divide the profits equally
between them; thus, the U.P. Construction Company was formed
 The two men agreed to a capital of Php100,000 with each of them contributing Php50,000; since Puzon was
short on cash, he promised to contribute his share upon approval of his Php 150,000 loan with the PNB
 However, Puzon’s loan would only be released upon clearing his collaterals; thus, he borrowed a total of
Php 40,000 from Uy, which Uy noted was his partial contribution to the partnership, to pay off
collaterals with the PNB and the Rehabilitation Finance Corporation
 The loan of Puzon was approved by the PNB and he gave to William Uy the amount of P60,000.00.
P40,000.00 was for the reimbursement of Uy's contribution, and the P20,000.00 as Puzon's contribution to the
partnership capital.
 To guarantee the aforementioned loan, Puzon, without the knowledge and consent of Uy, assigned the
payments of the BPH to the PNB. By virtue of said assignment, the Bureau of Public Highways paid the
money due on the partial accomplishments on the government projects in question to the Philippine National
Bank which, in turn, applied portions of it in payment of Puzon's loan.

Page 1 of 3
CASE DIGEST
22 Uy v Puzon
Not Sycip
Agency

 Of the Php 1,047,181 released by the BPH, Php 332,539 was applied to Puzon’s loan and only Php 27,
820 was deposited to the partnership
 Due to the increasing financial demand of the projects, Uy demanded for Puzon to comply with his obligation
under their contract by depositing his portion of the capital contribution; Puzon did not comply with any of Uy’s
demands
 After failing to reach an agreement with Uy, Puzon decided to end the subcontractor agreement for the
construction project and effectively ousted Uy from the management of the company
 In response, Uy filed a case against Puzon alleging that the latter had violated the terms of their partnership
CFI Ruling
IN FAVOR OF UY
 The defendant, contrary to the terms of their partnership agreement, failed to contribute his share in the
capital of the partnership; applied partnership funds to his personal use; ousted the plaintiff from the
management of the firm; and caused the failure of the partnership to realize the expected pro􀁁ts of at least
P400,000.00
 Court ordered Puzon to pay Uy the sum of Php 320,103.13; Of this amount, Php 200,000 was the plaintiff’s
share, Php 115,000 the legal interest, and Php 5,000 for attorney’s fees

 Case was raised to the SC

ISSUE & HELD:

Issue Held

W/N Puzon breached the terms of the YES.

partnership

W/N the award of damages was correct YES.

RATIO:
I. W/N Puzon breached the terms of the partnership – YES.

 Puzon failed to contribute his Php 50,000 capital share, he only contributed a total of Php 20,000 to the
partnership
 Puzon misapplied the proceeds of the partnership by applying the same to his PNB loan without the
knowledge and consent of Uy
 Puzon ousted Uy from management of the partnership; after Uy had demanded the latter's contribution to
the partnership capital, Puzon did not allow Uy to hold office in the U.P. Construction Company and his
authority to deal with the Bureau of Public Highways was revoked by the appellant

II. W/N the award of damages was correct – YES.

 the appellant received from the Bureau of Public Highways, in payment of the construction projects in
question, the amount of P1,047,181.01 and disbursed the amount of P952,839.77, leaving an unaccounted
balance of P94,342.24
 During the trial of this case, it was discovered that the appellant bad money and credits receivable from the
projects in question, in the custody of the Bureau of Public Highways, in the amount of P128,669.75,
representing the 10% retention of said projects. After the trial of this case, it was shown that the total
retentions deducted from the appellant amounted to P145,358.00
 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

RULING:

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 borne by the estate of the deceased
Bartolome Puzon, represented in this instance by the administrator thereof, Franco Puzon.

Page 2 of 3
CASE DIGEST
22 Uy v Puzon
Not Sycip
Agency

Page 3 of 3