COELI

CASE NO. 11
Evangelista v. CIR, GR L 9996, (1957)

FACTS:
Petitioners Eufemia, Manuela & Francisca Evangelista borrowed sum of money from their father and together
with their own personal funds they used said money to buy real properties from 4 sellers.

They appointed Simeon, their brother, as manager of the real properties with powers and authority to sell, lease or
rent out said properties to third persons.

Later on, they leased the properties to various tenants. They realized rental income from the said
properties.

Respondent CIR demanded the payment of income tax on corporations, among others.
Petitioners instituted a case in the CTA, praying to be absolved from the payment of the taxes in question. CTA
denied.

ISSUE: W/N petitioners have formed a partnership and consequently, are subject to the tax on corporations
provided for in NIRC

RULING: YES. The essential elements of a partnership are two, namely:

1. an agreement to contribute money, property or industry to a common fund; and
2. intent to divide the profits among the contracting parties.

The first element is undoubtedly present in the case at bar, for, admittedly, petitioners have agreed to, and did,
contribute money and property to a common fund. Their purpose was to engage in real estate transactions for
monetary gain and then divide the same among themselves, because:

a. The common fund was created by them purposely;

b. They invested the same, not merely not merely in one transaction, but in a series of transactions;
c. The aforesaid lots were not devoted to residential purposes, or to other personal uses, of petitioners
herein; and
d. The transactions existed for 15 years

For purposes of the tax on corporations, our NIRC includes these partnerships — with the exception of general
copartnerships — within the purview of the term "corporation. As defined in section 84 (b) of the Internal Revenue
Code "the term corporation includes partnerships, no matter how created or organized," This qualifying
expression clearly indicates that a joint venture need not be undertaken in any of the standard forms, or in
conformity with the usual requirements of the law on partnerships, in order that one could be deemed constituted
for purposes of the tax on corporations.  Therefore petitioners herein constitute a partnership, insofar as NIRC is
concerned and are subject to the income tax for corporations.

ANGELO
CASE NO. 13
Effects
Aguila v. CA

FACTS: Alfredo N. Aguilar is the manager of A.C. Aguila & Sons, Co., a partnership engaged in lending activities.

Felicidad S. Vda. de Abrogar, with the consent of her late husband, Ruben M. Abrogar, entered into a
Memorandum of Agreement with A.C Aguila, represented by Alfredo.
The MOA evidenced the sale of the spouses’ property in Marikina for P200,000 to A.C. Aguila . Felicidad is given the
option to repurchase within 90 days. Failure to exercise such right will result to the cancellation of the MOA, and
the Dead of Absolute Sale shall be final, and A.C. Aguila shall proceed to transfer ownership of the property.

In a Special Power of Attorney, Felicidad authorized the cancellation in the event of failure to redeem the property.

Felicidad failed to redeem the property. Atty. Lamberto C. Nanquil, counsel for A.C. Aguila, sent a letter to
Felicidad demanding that she vacate the premises. Felicidad’s refusal prompted A.C. Aguila to file an ejectment suit
before the MeTC-Marikina. The court ruled in favor of A.C. Aguila.

Felicidad then filed a petition for declaration of nullity of a deed of sale with the RTC-Marikina. She alleged that the
signature of her husband on the deed of sale was a forgery because he was already dead when the deed was
supposed to have been executed.

Felicidad also filed a criminal complaint for falsification against Alfredo with the Office of the Prosecutor-Quezon
City which was dismissed. Upon appeal, it was reversed.

ISSUE: Whether Aguila, Jr. is the real party in interest.

RULING: NO. It should be the partnership, not the manager, that must be impleaded. Felicidad has not
shown that A.C. Aguila, as a separate juridical entity, is being used for fraudulent, unfair, or illegal
purposes.

Moreover, the title to the subject property is in the name of A.C. Aguila and the Memorandum of Agreement was
executed between Felicidad, with the consent of her late husband, and A. C. Aguila & Sons, Co., represented by
Aguila, Jr. Hence, it is the partnership, not its officers or agents, which should be impleaded in any litigation
involving property registered in its name.

A real party in interest is one who would be benefited or injured by the judgment, or who is entitled to the
avails of the suit. Any decision rendered against a person who is not a real party in interest in the case cannot be
executed. Hence, a complaint filed against such a person should be dismissed for failure to state a cause of action.

GOMEZ
Case no. 16
Rules in Determination Existence of Partnership: Intent of Parties
Evangelista v. CIR
G.R. No. L-9996, October 15, 1957

FACTS:

 Petitioners, Eufemia, Manuela and Francisca all surnamed Evangelista, borrowed money from their
father to purchase 2 properties to be rented out.

 They appointed their brother Simeon Evangelista to 'manage their properties with full power to lease; to
collect and receive rents; to issue receipts therefor; in default of such payment, to bring suits against the
defaulting tenants; to sign all letters, contracts, etc., for and in their behalf, and to endorse and deposit all
notes and checks for them. For the profits earned from the leasing operation

 the Commissioner of Internal Revenue subject such to Corporate income tax.

ISSUE: Whether or not the CIR is correct to subject petitioner with corporate income tax.

RULING: YES, petitioners are under a partnership. According to Article 1767 of the Civil Code: By the contract of
partnership two or more persons bind themselves to contribute money, properly, or industry to a common fund, with
the intention of dividing the profits among themselves.
In this case, it was held that the 1) existence of a common fund; 2) entering into series of transactions; 3) the
lots purchased were not devoted to residential but to be let; 4) the properties being under one
management; and 5) petitioners failed to show evidence that would negate their creation of a partnership
– although the aforementioned when singly taken into consideration does not purport an intent to create a
partnership, collectively, there is no room for doubt on the existence of said intent by the petitioners of creating a
partnership.

As defined in section 84 (b) of the Internal Revenue Code "the term corporation includes partnerships, no
matter how created or organized," This qualifying expression clearly indicates that a joint venture need not be
undertaken in any of the standard forms, or in conformity with the usual requirements of the law on partnerships,
in order that one could be deemed constituted for purposes of the tax on corporations.

GOMEZ
Case no. 17
Rules in Determination Existence of Partnership: Intent of Parties
P&M Cattle v. Holler
P.2d 1019 (Wyo. 1977)

FACTS:

 Petitioner, P&M Cattle, is a partnership wherein it agreed to provide services to defendant, to pasture
cattle in the latter’s land, for which petitioner was paid by defendant a variable fee monthly.

 They also entered into a written agreement wherein it stated that they shall share the net money from
the sale of cattle less cost 50/50. (NOTE: No agreement as to the losses)

 Now when they experienced financial losses from their undertaking, Petitioner is now claiming from
defendant reimbursement for a portion of their losses.

 Defendant however claimed that their undertaking is a joint venture wherein each party shall bear their
own respective losses. Petitioner disagrees, it averred that they are in a partnership and should be sharing
not only with he profits, but also for the losses.

ISSUE: Whether or not there is an implied intent on the parties to create a partnership.

RULING: NO. An agreement to share profits is far from decisive that a partnership is intended.

Superimposed upon the rule of intent, it is frequently held that where there is no express agreement to form a
partnership, the question of whether such a relation exists must be gathered from the conduct, surrounding
circumstances and the transactions between the parties. Even a written agreement, designating the parties as
partners and providing for a sharing of the profits, is only evidential and not conclusive of the existence of a
partnership.

In the case before us there was no express agreement to form a partnership. True, there was an agreement
but nowhere in that document is there anywhere mentioned the term partnership. Nor is there anywhere
mentioned any sharing of losses, which is normally concomitant with a sharing of profits in a partnership.
While § 17-201(4) (The written contract) creates an inference, that inference is not conclusive.

DE FIESTA
CASE NO. 18
INTENT OF THE PARTIES
Murphy v. Stevens, 645 P2d 82, 85
FACTS: This case arose out of an action by W.J. Murphy against Eugene Stevens for a determination that a
partnership existed and that an accounting should be had.

In 1967, the parties orally agreed to enter into a business relationship. Murphy contended that the arrangement
was a partnership; Stevens contended that the arrangement was for a joint venture, to be followed by other joint
ventures if the arrangement worked out satisfactorily.

W.J. Murphy testified that they agreed to join each other in mineral exploration and development. Any
consideration they received would be split equally three ways. They were also to split the expenses equally at
an accounting each year, although the expenditures were initially to be carried separately. Each partner
was to claim separate income tax deductions for his expenses.

Ralph Schauss testified that the agreement was to share 1/3, 1/3, and 1/3 of profits and expenses on whatever
properties were acquired, and that the partners generally had a meeting of minds before going in on new projects,
although not always.

Eugene Stevens testified that he had never been in a partnership with anyone in his life. Stevens contends that
Murphy and Schauss and he only "agreed to agree" on projects concerning uranium exploration and mining.

ISSUE: W/N a partnership existed

RULING: YES—a partnership as an association of two or more persons to carry on as co-owners a business
for profit.

The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in
the business. The prima facie evidence can be rebutted by a showing that there was no intent to create a
partnership, since intent of the parties is controlling.  That intent, however, is the intent to do the things which
determine whether a partnership relation exists. Persons who intend to do the things that constitute a
partnership are partners whether their expressed purpose was to create or avoid the relationship.

There was sufficient evidence for the trial court to find that a partnership existed.

AREEJ
CASE NO. 21
Co-ownership does not of itself establish a partnership
Lorenzo Oña and Heirs of Julia Buñales v. Commissioner of Internal Revenue | G.R. No. L-19342, May 25,
1972 (p. 33 of De Leon 2019)

PETITIONERS: Lorenzo T. Oñ a And Heirs of Julia Buñ ales, Namely: Rodolfo B. Oñ a, Mariano B. Oñ a, Luz B. Oñ a,
Virginia B. Oñ a And Lorenzo B. Oñ a, Jr., 

RESPONDENTS: Commissioner of Internal Revenue

FACTS: In 1944, Julia Buñ ales died leaving as heirs her surviving spouse, Lorenzo T. Oñ a and her five children. The
project of partition shows that the heirs have undivided one-half (1/2) interest in ten parcels of land with a
total assessed value P87, 860.00, six houses with a total assessed value of P17,590.00 and P50,000 from the War
Damage Commission. No attempt was made to divide the properties therein listed. Instead, the properties
remained under the management of Lorenzo who used said properties in business by leasing or selling them
and investing the income derived therefrom and the proceeds from the sales thereof in real properties and
securities. As a result, petitioners' properties and investments gradually increased from P105,450.00 in 1949
to P480,005.20 in 1956

From said investments and properties petitioners derived profits. However, petitioners did not actually receive
their shares in the yearly income which was always left in the hands of Lorenzo who invested them in real
properties and securities. All the profits from these ventures were divided among petitioners proportionately in
accordance with their respective shares in the inheritance. Thus, CIR decided that petitioners formed an
unregistered partnership and was assessed corporate income taxes in the amounts of P8,092.00 and
P13,899.00 as corporate income taxes for 1955 and 1956, respectively.

ISSUE: Whether or not the petitioners formed an unregistered partnership.

RULING: YES. The co-ownership of inherited properties is automatically converted into an unregistered
partnership the moment the said common properties and/or the incomes derived therefrom are used as a
common fund with intent to produce profits for the heirs in proportion to their respective shares in the
inheritance as determined in a project partition. The reason for this is simple. From the moment of such
partition, the heirs are entitled already to their respective definite shares of the estate and the incomes
thereof, for each of them to manage and dispose of as exclusively his own without the intervention of the
other heirs, and, accordingly he becomes liable individually for all taxes in connection therewith.

If after such partition, he allows his share to be held in common with his co-heirs under a single
management to be used with the intent of making profit thereby in proportion to his share, there can be no
doubt that, even if no document or instrument were executed for the purpose, for tax purposes, at least, an
unregistered partnership is formed. This is exactly what happened to petitioners in this case.

From the moment petitioners allowed not only the incomes from their respective shares of the inheritance but
even the inherited properties themselves to be used by Lorenzo T. Oñ a as a common fund in undertaking several
transactions or in business, with the intention of deriving profit to be shared by them proportionally, such act was
tantamount to actually contributing such incomes to a common fund and, in effect, they thereby formed an
unregistered partnership within the purview of the above-mentioned provisions of the Tax Code.

Further, petitioners' reliance on Article 1769, paragraph (3), of the Civil Code, providing that: "The sharing of gross
returns does not of itself establish a partnership, whether or not the persons sharing them have a joint or common
right or interest in any property from which the returns are derived," is unavailing. When our Internal Revenue Code
includes "partnerships" among the entities subject to the tax on "corporations", said Code must allude, therefore, to
organizations which are not necessarily "partnerships", in the technical sense of the term. For purposes of the tax
on corporations, our National Internal Revenue Code includes partnerships such as a syndicate, group, pool, joint
venture or other unincorporated organization, through or by means of which any business, financial operation, or
venture is carried on — with the exception only of duly registered general copartnerships — within the purview of
the term "corporation." It is, therefore, clear to our mind that petitioners herein constitute a partnership, insofar as
said Code is concerned, and are subject to the income tax for corporations.

Martin
Case No. 22
Article 1769(2): Co-ownership does not of itself establish a partnership
Obillos vs. CIR| GR No. L-68118

Siblings: Jose P. Obillos, Jr., Sarah P. Obillos, Romeo P. Obillos, Remedios P. Obillos
Case Nature: Judgment of CTA REVERSED.
Facts: Jose Obillos, Sr, after completing payment (P178,708.12) on two lots (1,124 and 963 sqm from Ortigas & Co.,
Ltd.) at Greenhills, San Juan, Rizal, transferred his rights on said lots to his four children, the petitioners, to enable
them to build their residences and TCTs were issued to the latter (as co-owners). After more than 1 year, the
siblings sold the said lots with a profit (P134,341.88 total or P33,584 each) and treated the same as capital gain
(paid income tax – ½ of share in the profit).

However, the CIR required the petitioner to pay for corporate income tax on the profit in addition to individual
income tax on their shares thereof on the theory that the petitioners had formed an unregistered partnership or
joint venture simply because they allegedly contributed P178,708.12 to buy the two lots, resold the same and
divided the profit among themselves.

The CTA ruled in favor of CIR, hence this petition.

Issue: Whether or not the siblings have established a partnership from the said sale of co-owned property.

Ruling: No. To regard the petitioners as having formed a taxable unregistered partnership would result in
oppressive taxation and confirm the dictum that the power to tax involves the power to destroy.

As testified by Jose Obillos, Jr., they had no such intention. They were co-owners pure and simple. To consider them
as partners would obliterate the distinction between a co-ownership and a partnership. The petitioners were not
engaged in any joint venture by reason of that isolated transaction. Their original purpose was to divide the lots for
residential purposes. If later on they found it not feasible to build their residences on the lots because of the high
cost of construction, then they had no choice but to resell the same to dissolve the co-ownership. The division of
the profit was merely incidental to the dissolution of the co-ownership which was in the nature of things a
temporary state.

The sharing of gross returns does not of itself establish a partnership, whether or not the persons sharing them
have a joint or common right or interest in any property from which the returns are derived". There must be an
unmistakable intention to form a partnership or joint venture. Co-Ownership who own properties which produce
income should not automatically be considered partners of an unregistered partnership, or a corporation, within
the purview of the income tax law. To hold otherwise, would be to subject the income of all co-ownerships of
inherited properties to the tax on corporations, inasmuch as if a property does not produce an income at all, it is
not subject to any kind of income tax, whether the income tax on individuals or the income tax on corporation.

In a co-ownership from inheritance, property inherited pro-indiviso from their deceased parents; did not
contribute or invest additional capital to increase or expand the inherited properties; merely continued dedicating
the property to the use to which it had been put by their forebears; individually reported in their tax returns their
corresponding shares in the income and expenses, and continued for many years the status of co-ownership in
order.

In the instant case, what the Commissioner should have investigated was whether the father donated the two lots
to the petitioners and whether he paid the donor's tax. However, the Court is not prejudging this matter. It might
have already prescribed.

Martin
Case No. 23
Article 1769(2): Co-ownership does not of itself establish a partnership
Mariano Pascual and Renato Dragon vs. CIR| GR No. 78133

Case Nature: CTA decision REVERSED.

Facts:
Transaction A – Bought 2 lots from Santiago Bernardino, et al. in 1965 and sold to Marenir Development
Corporation in 1968. Net profit = P165,224.70
Transaction B – Bought 3 lots from Juan Roque in 1966 and sold to Erlinda Reyes and Maria Samson in 1970. Net
profit =P60,000.00

Petitioners paid capital gains tax in 1973 and 1974 by availing of the tax amnesties granted in the said years.
However, in 1979, acting BIR Commissioner Efren I. Plana assessed petitioners deficiency corporate income taxes
(P107,101.70). Petitioners protested the said assessment asserting that they had availed of tax amnesties way back
in 1974. Thus, Commissioner informed petitioners that in the years 1968 and 1970, petitioners as co-owners in the
real estate transactions formed an unregistered partnership or joint venture taxable as a corporation and that the
unregistered partnership was subject to corporate income tax as distinguished from profits derived from the
partnership by them which is subject to individual income tax; and that the availment of tax amnesty under P.D.
No. 23, as amended, by petitioners relieved petitioners of their individual income tax liabilities but did not relieve
them from the tax liability of the unregistered partnership.
CTA ruled in favor of CIR with the Evangelista case as the basis. hence this petition.

Issue: Whether or not petitioners formed a partnership because of the 2 instances of sale of co-owned properties.

Ruling: No. In Evangelista, there was a series of transactions (24) .The character of habituality peculiar to business
transactions engaged in for the purpose of gain was present. The properties were leased out to tenants for several
years. The business was under the management of one of the partners. Such condition existed for over fifteen (15)
years. None of the circumstances are present in the case at bar. The co-ownership started only in 1965 and ended
in 1970. The transactions were isolated. The character of habituality peculiar to business transactions for the
purpose of gain was not present. There is no evidence that petitioners entered into an agreement to contribute
money, property or industry to a common fund, and that they intended to divide the profits among themselves.
Respondent commissioner and/ or his representative just assumed these conditions to be present on the basis of
the fact that petitioners purchased certain parcels of land and became co-owners thereof. They shared in the gross
profits as co- owners and paid their capital gains taxes on their net profits and availed of the tax amnesty thereby.
And even assuming for the sake of argument that such unregistered partnership appears to have been formed,
since there is no such existing unregistered partnership with a distinct personality nor with assets that can be held
liable for said deficiency corporate income tax, then petitioners can be held individually liable as partners for this
unpaid obligation of the partnership. However, as petitioners have availed of the benefits of tax amnesty as
individual taxpayers in these transactions, they are thereby relieved of any further tax liability arising therefrom.

The sharing of returns does not in itself establish a partnership whether or not the persons sharing therein have a
joint or common right or interest in the property. There must be a clear intent to form a partnership, the existence
of a juridical personality different from the individual partners, and the freedom of each party to transfer or assign
the whole property. Co-ownership or co-possession does not 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.

KIM
Case No. 24
Article 1769 par 2
Stern vs Department of Revenue 217 NW 2d 326 (1974)

** case is a US jurisprudence no full text available; made thru snippets and case not found in De Leon

Facts: In 1958 Bernard Stern and his wife Marie contributed $3,500 USD of their separate to start a interior design
business known as Rhinelander Decorating Co. they also handled their the store in their own capabilities but no
agreement was made to make which states or made the co, as a partnership.

The couple didn’t regularly pay their taxes to the proper authorities but at some point Bernard claimed
most the income as his if he if filling for taxes. The business was then categorized as a sole proprietorship causing
the department to demand Bernard to pay additional taxes. Bernard filed a petition for review and prayed for an
abatement to reduce his taxes claiming that he and his wife had formed a partnership but the court rule that they
are were not.

Issue: W/N Tax appeals commission erred in ruling that there was no partnership between the spouses?

Ruling: No. a partnership as an `association of 2 or more persons to carry on as co-owners a business for profit.'
More specifically, it is recognized *510 that four elements need be met so as to qualify as a partnership. Initially,
the contracting parties must intend to form a bona fide partnership and accept the legal requirements and duties
emanating therefrom. Secondly, there must exist a community of interest in the capital employed. Thirdly, there
must be an equal voice in the management of the partnership. Finally, there must be a sharing and distribution of
profits and losses. Applying these elements to the case at bar, we hold that a bona fide partnership was not created.
While the taxpayers may have desired to create a marital financial relationship similar to a partnership, it is clear
they did not intend to create a bona fide partnership."
The record shows that respondent and his wife had a very close relationship and that they carried over
this relationship, into the business operation. This relationship however, stems from their marriage and
their desire to hold all property jointly and not from any business motive. This is not sufficient to satisfy
the law

The burden of proving the existence of a partnership rests with respondent or one who assails that there is a
partnership. a partnership will not be implied merely because of common ownership of property, whether or not
profits are shared by the co-owners.

AIRA
CASE NO. 26
Sharing of gross return does not establish a partnership
Oña vs. Commissioner of Internal Revenue, 45 SCRA 74, May 25, 1972

FACTS: Julia Bunales died, leaving as heirs her surviving spouse, Lorenzo Oñ a and her five children. Lorenzo was
was appointed administrator of the estate. He submitted the project of partition which was approved by the Court.
Because 3 of the heirs were still minors when the project of partition was approved, Lorenzo filed a petition for
appointment as guardian of said minors.

The project of partition shows that the heirs have undivided 1/2 interest in 10 parcels of land, 6 houses and an
undetermined amount to be collected from the War Damage Commission. The amount received from the War
Damage Commission was later used in the rehabilitation of properties.

Although the project of partition was approved, no attempt was made to divide the properties therein listed.
Instead, the properties remained under the management of Lorenzo who used said properties in business by
leasing or selling them and investing the income derived therefrom and the proceeds from the sales thereof in real
properties and securities. As a result, petitioners’ properties and investments gradually increased. CIR claims that
petitioners have claimed an unregistered partnership.

ISSUE: What is the effect of Lorenzo’s acts of management on the existing co-ownership?

RULING: The co-ownership is automatically converted into a partnership. From the moment of such partition, the
heirs are entitled already to their respective definite shares of the estate and the incomes thereof, for each of them
to manage and dispose of as exclusively his own without the intervention of the other heirs, and, accordingly, he
becomes liable individually for all taxes in connection therewith. If after such partition, he allows his share to be
held in common with his co-heirs under a single management to be used with the intent of making profit thereby in
proportion to his share, there can be no doubt that, even if no document or instrument were executed for the
purpose, for tax purposes, at least, an unregistered partnership is formed.

In this connection, Article 1769, paragraph (3), of the Civil Code, providing that: “The sharing of gross returns does
not of itself establish a partnership, whether or not the persons sharing them have a joint or common right or
interest in any property from which the returns are derived,” is unavailing.

CHAP
Case No. 28
Receipt of profits prima facie evidence of being a partner
Heirs of Jsose Lim and Juliet Lim, G.R. No. 172690, March 3, 2010
Not found in De Leon.

FACTS: Jose Lim, together with his two (2) friends, Norberto and Jimmy, formed a partnership to engage in the
trucking business (hauling and transport of lumber). Jose took over the management of the business. When Jose
died, his heirs, including Elfledo, and the remaining partners agreed to continue the business under the
management of Elfledo.
Partner Norberto was ambushed and the trucking business started to falter. Elfledo also died due to heart-attack,
leaving respondent as his sole surviving heir, Juliet Lim. When the partnership ceased, it was noted that there
were nine (9) trucks and various real property allegedly derived from the profit of the partnership but were all
registered in the name of Elfledo and his wife Juliet. Petitioner heirs of late Jose Lim are now claiming that
Elfledo took over the administration of the aforementioned properties, which belonged to the estate of Jose,
without their consent and approval. Petitioners are alleging that Elfledo Lim was never a partner or an investor in
the business and merely supervised the properties using the income from the trucking business of the partners.

Claiming that they are co-owners of the properties, petitioners required respondent to submit an accounting of all
income, profits and rentals received from the estate of Elfledo, and to surrender the administration thereof.

Respondent Juliet avers that (1) her husband was a partner that Jose even gave Elfledo P50,000.00 as the latter’s
capital in an informal partnership with Jimmy and Norberto, (2) that the business flourished through the efforts of
Elfledo and (3) that the aforementioned properties were fruits of her husbands labor through other business
ventures, not of the partnership, and therefore they are conjugal properties.

RTC: Granted the petition for partition and accounting. CA, however, reversed RTC’s order.

ISSUE: Was Elfledo Lim a partner?

RULING: YES.
The extent of his control, administration and management of the partnership affairs, the facts that he was given
P50,000 by Jose, the fact that its properties were placed in his name, and that he was not paid salary or other
compensation by the partners, are indicative of the fact that Elfledo was a partner and a controlling one at that.

Petitioners fell short of proof required to establish that: (1) Elfledo was not a partner; and (2) all the properties
acquired by Elfledo and respondent form part of the estate of Jose, having been derived from the alleged
partnership. Furthermore, petitioners failed to adduce any evidence to show that the real and personal properties
acquired and registered in the names of Elfledo and respondent formed part of the estate of Jose, having been
derived from Jose’s alleged partnership with Jimmy and Norberto. They failed to refute respondent’s claim that
Elfledo and respondent engaged in other businesses.

In civil cases, the party having the burden of proof must establish his case by a preponderance of evidence. In the
instant case, petitioners only relied on Jimmy’s testimony. Thus, we apply the basic rule of evidence that between
documentary and oral evidence, the former carries more weight.

KARLY CASE NO. 30

FORMAL REQUIREMENTS
LILIBETH SUNGA-CHAN and CECILIA SUNGA vs. LAMBERTO T. CHUA, G.R. No. 143340 August 15, 2001

FACTS: Respondent LAMBERTO T. CHUA filed a complaint against petitioners Lilibeth and Cecilia, daughter and
wife, respectively of the deceased Jacinto L. Sunga, for "Winding Up of Partnership Affairs, Accounting, Appraisal
and Recovery of Shares" with the RTC-Sindangan, ZDN.

Respondent alleged that in 1977, he verbally entered into a partnership with Jacinto in the distribution of Shellane
Liquefied Petroleum Gas (LPG) in Manila. For business convenience, they allegedly agreed to:
(1) Register the business name of their partnership, SHELLITE GAS APPLIANCE CENTER, under the name of Jacinto
as a sole proprietorship;
(2) Initial capital contribution of P100,000.00 each Jacinto and respondent (P200k total partnership capital);
(3) Intended that the profits will be divided equally between them.
The partnership allegedly had Jacinto as manager (compensation of 10% of gross profits), assisted by Josephine Sy
(compensation of 10% of net profits), a sister of the wife respondent, Erlinda Sy. Jacinto furnished respondent with
the merchandise inventories, balance sheets and net worth of Shellite from 1977 to 1989.

Upon Jacinto's death in the later part of 1989, petitioner Cecilia and daughter, took over the management of
Shellite without respondent's consent. Petitioners contended that no partnership existed between
respondent and Jacinto. RTC ruled in favor of the respondent. On appeal, CA affirmed RTC’s decision. Hence, this
petition for review on certiorari.

ISSUE: WON there existed a partnership between respondent Lamberto T. Chua and the late Jacinto L. Sunga.

RULING: YES. A partnership may be constituted in any form, except where immovable property of real
rights are contributed thereto, in which case a public instrument shall be necessary. Hence, based on the
intention of the parties, as gathered from the facts and ascertained from their language and conduct, a verbal
contract of partnership may arise.

The essential profits that must be proven to ensure that a partnership was agreed upon are (1) mutual
contribution to a common stock, and (2) a joint interest in the profits. The testimony of respondent and his alter
ego, Josephine (Assistant Manager), have been admitted to prove the existence of the partnership between
respondent and Jacinto.

In the case at bar, non-compliance with the registration of the partnership with the SEC, will not invalidate the
partnership considering that the totality of the evidence proves that respondent and Jacinto indeed forged the
partnership in question.

Eloise

Case 32: Litonjua v. Litonjua (2005) | Forming the Partnership

Facts: Aurelio Litonjua (Pet.) and Eduardo Litonjua (Resp.) are brothers. In 1973, Aurelio alleged that Eduardo
entered into a contract of partnership with him. The brothers’ relationship turned sour. The legal dispute
between them started when, on Dec. 2002, when Aurelio filed a suit in RTC-Pasig against his brother Eduardo and
herein respondent Robert T. Yang (Yang) and several corporations of the Odeon Theater Business for
specific performance and accounting. Aurelio showed as evidence a letter sent to him by Eduardo that the
latter is allowing Aurelio to manage their family business, Odeon Theater business (which had since expanded
through investment when this case arose). A memorandum was subsequently made for the said alleged
partnership agreement. The memorandum stated that in exchange of Aurelio retaining his share in the family
business (movie theatres, shipping and land development) and some other immovable properties, he will be given
P1 Million or 10% equity in all these businesses and those to be subsequently acquired by them whichever is
greater. Eduardo alleged, among others, as affirmative defense that whatever undertaking Eduardo agreed to
do, if any, under the memorandum is unenforceable under the provisions of the Statute of Frauds. Yang
moved to dismiss averring that petitioner has no cause of action and the complaint does not state any. RTC denied
both the affirmative defenses of Eduardo and Yang’s motion to dismiss. Elevated to the CA, CA reversed the RTC
ruling stating in brief that that the alleged partnership, as evidenced by the actionable documents (letter and
memorandum) attached to the complaint, is "void or legally inexistent". MR in the CA denied, hence this petition.
Petitioner’s demand is for delivery or payment to him, as Eduardo’s and Yang’s partner, of his
partnership/joint venture share, after an accounting has been duly conducted of what he deems to be
partnership/joint venture property.

Issue: Whether there exists a partnership.

Ruling: NO. PETITION DENIED—CA RULING AFFIRMED. The partnership is void and legally nonexistent.
Petitioner’s contribution to the partnership consisted of his share in the Litonjua family businesses which owned
variable immovable properties—hence, there are formalities that need to be followed. A partnership may be
constituted in any form, save when immovable property or real rights are contributed thereto or when the
partnership has a capital of at least ₱3,000.00, in which case a public instrument shall be necessary.

The documentary evidence presented by Aurelio, i.e. the letter from Eduardo and the Memorandum, did not
prove partnership. The 1973 letter from Eduardo on its face, contains typewritten entries, personal in tone, but is
unsigned and undated. As an unsigned document, there can be no quibbling that said letter does not meet
the public instrumentation requirements exacted under Article 1771 (how partnership is constituted) of
the Civil Code. Moreover, being unsigned and doubtless referring to a partnership involving more than P3,000.00
in money or property*, said letter cannot be presented for notarization, let alone registered with the Securities and
Exchange Commission (SEC), as called for under the Article 1772 (capitalization of a partnership) of the Code. The
Memorandum is also not a proof of the partnership for the same is not a public instrument and again, no
inventory was made of the immovable property and no inventory was attached to the Memorandum. Article
1773 of the Civil Code requires that if immovable property is contributed to the partnership an inventory shall be
had and attached to the contract.

Petitioner’s complaint for specific performance anchored on an actionable document of partnership which is
legally inexistent or void or, at best, unenforceable does not state a cause of action as against respondent Eduardo
and the corporate defendants. And if no of action can successfully be maintained against respondent Eduardo
because no valid partnership existed between him and petitioner, the same goes for Yang. Surely, Yang
could not have become a partner in, or could not have had any form of business relationship with, an inexistent
partnership.

*doubtless, because the facts of this case so reveal that Odeon Theater business has expanded even in Cineplex, Inc.,
LCM Theatrical Enterprises, etc.

WEE
Case No. 43
Particular Partnership
Commissioner of Internal Revenue (CIR) v. Suter ∣ G.R. No. L-25532, 28 February 1969

FACTS: A limited partnership [William J. Suter 'Morcoin' Co., Ltd.] was formed by herein respondent William J.
Suter as the general partner, and Julia Spirig and Gustav Carlson, as the limited partners. However, Suter and
Spirig got married and, thereafter, Carlson sold his share in the partnership to Suter and his wife. The sale was duly
recorded with the SEC.

The limited partnership had been filing its income tax returns as a corporation, without objection by the herein
petitioner CIR, until the latter, in an assessment, consolidated the income of the firm and the individual incomes of
the partners-spouses resulting in a determination of a deficiency income tax against Suter, who protested the
assessment, and requested its cancellation and withdrawal but was denied. He appealed to the CTA which
rendered a decision reversing that of the CIR.

The present case is a petition for review, filed by the CIR, of the tax court's aforesaid decision. CIR contends [or
theorizes] that the marriage of Suter and Spirig and their subsequent acquisition of the interests of remaining
partner in the partnership dissolved the limited partnership. This is rested upon the opinion of now Senator
Tolentino that: A husband and a wife may not enter into a contract of general co-partnership, because under the
Civil Code, which applies in the absence of express provision in the Code of Commerce, persons prohibited from
making donations to each other are prohibited from entering into universal partnerships. It follows that the
marriage of partners necessarily brings about the dissolution of a pre-existing partnership.

ISSUE: Whether or not the limited partnership was dissolved after the marriage of Suter and Spirig and the
subsequent sale of Carlson’s participation.
RULING: NO. The petitioner-appellant has evidently failed to observe the fact that William J. Suter "Morcoin" Co.,
Ltd. was not a universal partnership, but a particular one. As appears from Articles 1674 and 1675 of the Spanish
Civil Code, of 1889 (which was the law in force when the subject firm was organized in 1947),
a universal partnership requires either that the object of the association be all the present property of the partners,
as contributed by them to the common fund, or else "all that the partners may acquire by their industry or
work during the existence of the partnership". William J. Suter "Morcoin" Co., Ltd. was not such a universal
partnership, since the contributions of the partners were fixed sums of money, P20,000.00 by Suter and
P18,000.00 by Spirig and neither one of them was an industrial partner. It was not a partnership that spouses
were forbidden to enter by Article 1677 of the Civil Code of 1889.

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. What the law prohibits was when the spouses entered into a
general partnership. In the case at bar, the partnership was limited.

“A firm engaged, among other activities, in the importation, marketing, distribution and operation of automatic
phonographs, radios, television sets and amusement machines, their parts and accessories” is a particular
partnership.

THE DECISION UNDER REVIEW IS HEREBY AFFIRMED.

ALCALA
CASE NO. 47
Partnership by Estoppel
Anfenson v. Banks LRA 1918D, 482, 163 NW 698

FACTS:
Penfield operated a private unincorporated bank named "The Bank of Kelley." He publicly represented in a small
circular or booklet that Banks, his father-in-law, was a partner in August-September, 1907. The circular states the
following:

(FRONT PAGE)
"The Bank of Kelley, Iowa
Capital ........................................... $10,000
Individual Responsibility, $75,000.00 E. J. Penfield, President C. L. Siverly, Cashier Henry Banks F. W. Penfield

(2ND PAGE)
"We invite your attention to the first sheet of this announcement showing an individual responsibility of $75,000
and giving the names of the owners and managers of this bank. xxx

Copies of this were distributed on the counters of the business houses of Kelley, others enclosed in passbooks of
depositors.
HOWEVER, this representation was wholly without the authority of Banks.
Banks protested to the cashier and Penfield’s father who was also named in the circular. Later, Penfield personally
apologized and promised to cease the use of Banks' name. Banks never did any business for the bank nor assumed
any authority in the management thereof.
3 years after the circular was first issued, the bank failed, and Penfield absconded. Depositors, with the belief that
Banks was a partner, sought to hold Banks as a quasi partner.

ISSUE: W/N Banks is liable as a partner by estoppel or ostensible partner.

RULING & MAINPOINT in bold:

NO. One who has never held himself out as the partner of another, and who, when he learned that he had
been falsely held out by such other as such partner, promptly sought out such other and repudiated such
holding out, and received a promise that such holding out would cease, is, nothing else appearing, under no
legal or moral duty to give further publicity to his repudiation. (holding out)

One may become liable as an ostensible partner if the general reputation that he is a partner has been so persistent
and so long continued as to raise the presumption that he is in fact a partner, and he has knowledge of such general
reputation, or as an ordinarily careful and prudent man should have knowledge of such general reputation, but
makes no attempt to contradict or deny the fact of partnership, and others are by such general reputation led to
believe that he is a partner, and, acting on such belief and by reason thereof, are induced to extend credit and are
damaged thereby.

NOTES:
"An estoppel in pais is based on fraud, and the conduct relied upon to establish it must be such as to
amount to fraud, actual or constructive. * * * There can be no estoppel by silence unless there is a duty to
speak."
(1) Banks, being guilty of no moral turpitude, was not equitably estopped to deny that he was a partner of
Penfield's.
(2) Banks was under no obligation to speak, further than he did speak, with reference to Penfield's unauthorized
act, and therefore his subsequent silence did not work an equitable estoppel.
(3) Irrespective of the conduct of Banks, the depositors might not recover, because of their failure to exercise due
diligence to learn whether Banks was in fact a partner of Penfield's.

Equitable Estoppel
 Silence — Duty to Speak. Silence, when there is no moral or legal duty to speak, cannot work an estoppel
in pais.
 Equitable Estoppel — Implied Fraud — Estoppel to Deny Partnership. Conduct which will work an
estoppel in pais, in those cases where there is no affirmative evidence of wrongful design or fraudulent
purpose, must be so grossly negligent or of a character so manifestly misleading to others that it would be
tantamount to a fraud to permit the actor to escape liability to those who, in the exercise of reasonable
diligence, have been misled to their injury. So held on the issue of a partnership by estoppel.

AYEH
CASE NO. 48
D. PARTNERSHIP BY ESTOPPEL
Richard P. Brown v Gerstein & Another (Weiner) (460 N.E.2d 1043)

Action for damages against lawyers Gertein & Weiner.

FACTS: The Browns owned a parcel of commercial property in Wenham which they had purchased in 1967. This
was mortgaged with Danvers Savings Bank which seeks to foreclose the same. That was when the plaintiffs
consulted Gerstein.

Gerstein advised to file for breach of contract against the bank for alleged mishandling of their loan and assured
the spouses that there would be no foreclosure. However, when the property was already sold by the bank,
Gerstein he had had a "deal" with the bank's attorney (not mentioned who), and that this lawyer had "double-
crossed him." He directed the spouses to another lawyer, who declined to represent the plaintiffs after receiving
information from the bank's counsel which made it doubtful that the plaintiffs could prevail at trial. As a result, the
complaint was never filed, and the lawyer terminated his relationship with the plaintiffs after telling them that he
had returned their file to Gerstein.

The spouses filed this case to seek damages on the ground among others of the malpractice of Gerstein impleading
together with him Weiner who practiced law with Gerstein and was derivatively liable for Gerstein's actions as his
"partner by estoppel.

Evidences presented which are pertinent in this case: in 1972 Browns had made a check payable to "Gerstein and
Weiner" (apparently for legal services unrelated to the instant case) which was deposited in "Gerstein and Weiner
clients' account"; that the plaintiffs thereafter received letters from Gerstein on stationery bearing the legend
"Gerstein and Weiner.

ISSUE: WON Weiner, who practiced law with Gerstein, was derivatively liable for Gerstein's actions as his "partner
by estoppel.

RULING: NO. Standard Oil Co. v. Henderson (1928) establishes that to prevail under the doctrine of partnership by
estoppel, a plaintiff must prove: (1) that the would-be partner has held himself out as a partner; (2) that such
holding out was done by the defendant directly or with his consent; (3) that the plaintiff had knowledge of such
holding out; and (4) that the plaintiff relied on the ostensible partnership to his prejudice. In this case, evidence
was insufficient to satisfy the second requirement, viz., that any holding out was done directly by Weiner or with
his consent.

The Henderson decision establishes, however, that the use of a person's name in a business, even with that
person's knowledge, is too slender a thread to warrant a favorable finding on the consent element. The evidence
concerning the 1972 check and the account in which it was deposited is irrelevant to establish consent in
connection with the 1975 transactions (foreclosure case) before the court.

To sum up: There is to be a new trial limited to (a) whether Gerstein's conduct constituted deceit which prevented
the plaintiffs from paying the bank's mortgage in full and (b) whether Gerstein's deceit violated G.L.c. 93A, §§ 2(a)
and 11. On the balance of the claims against Gerstein, the plaintiffs have failed in their proof, as they also have on
their claim of derivative liability on Weiner's part.
AYEH
CASE NO. 49
D. PARTNERSHIP BY ESTOPPEL
Wisconsin Telephone v Lehmann

Action on an account for local and long-distance telephone service rendered by plaintiff through telephone No.
196W of the Watertown exchange.

FACTS: Defendant Walter R. Lehmann lived on a farm near Watertown, and dealt in cattle as a sole trader under
the widely advertised name W. R. Lehmann Son. Apparently, his son, Wayne R. Lehmann, had formerly been in
business with him, but by February, 1952, had withdrawn and gone into business for himself as a dealer in calves.
Wayne lived across the road from defendant, and had his business headquarters in a building on defendant's farm,
over which was a sign, "W. R. Lehmann Son — Dairy Cattle." Telephone No. 196W was located in that building.
Wayne requested plaintiff to list phone No. 196W under the name W. R. Lehmann Son. The bills were also sent to
Wayne.

Plaintiff Wisconsin Telephone based its case on the claim for bills due that Wayne had apparent or ostensible
authority to bind his father in the premises; that its employees having to do with the matter believed that
defendant and Wayne were partners as W. R. Lehmann Son.

ISSUE: WON defendant Walter may be held liable on the ground of partnership in estoppel.

RULING: NO. There was also no evidence that Wayne Lehmann was in fact either a partner or an agent of
defendant at the time when Wayne requested phone No. 196W to be listed under the name W. R. Lehmann Son or
thereafter, or that he had any actual authority from defendant to request such listing or to obligate defendant to
pay for telephone service furnished to No. 196W.

Estoppel in pais is an equitable doctrine, and in general does not operate against one unless his conduct
has induced another to change his position to his prejudice. In this case the service had been rendered when
the telephone was listed in Wayne's name, and there is no showing that plaintiff would not have continued to
render the service as long as the bills were paid, had it known that only Wayne would be responsible for payment.
There is nothing to show that in changing the listing from Wayne's name to that of W. R. Lehmann Son, plaintiff
relied in any way on defendant's credit.

The liability of the nonpartner being based on estoppel, it is essential to the cause of action that the party asserting
liability must have been induced by the misleading appearance to change his position to his detriment. Since
plaintiff was seeking to hold defendant liable by estoppel, it had the burden of proving the elements of estoppel.
Having failed to offer any proof of change of position to its prejudice in reliance on the misleading appearance,
plaintiff failed to make a prima fac ie case the bills were sent to Wayne for the jury.

DE FIESTA
CASE NO. 50
JOINT VENTURE
29 FEBRUARY 1980 SEC Opinion issued to Antonio Librea

This is only a letter

W/N 2 or more medium-size corporations (contractors) may enter into a partnership or joint venture/consortium
for the purpose of qualifying in terms of capitalization and equipment in large-scale projects of the Ministry of
Public Highways through competitive bidding.
According to the prevailing view, a corporation has no implied power to become a partner with an individual or
another corporation. This limitation is based on public policy.

"It is fairly well-settled that corporations cannot ordinarily enter into partnerships with other corporations or
individuals, for, in entering into a partnership the identity of the corporation is lost or merged with that of another
and the direction of the affairs is placed in other hands than those permitted by the law of its creation.

Exceptions to the application of this general rule may be allowed by this Commission, provided that the
following conditions are adequately met:
1. The articles of incorporation of the corporations involved must expressly authorize the corporation to enter
into contracts of partnership with others in the pursuit of its business;
2. The agreement or articles of partnership must provide that all the partners will manage the partnership; and
3. The articles of partnership must stipulate that all the partners are and shall be jointly and severally liable for
all the obligations of the partnership.

Moreover, two or more corporations may enter into a joint venture/consortium if the nature of the venture is in
line with the business authorized by its charter through a contract or voluntary agreement between the said
parties.

DE FIESTA
CASE NO. 51.
JOINT VENTURE
Litonjua v. Litonjua, G.R. No. 166299-300, December 13, 2005

FACTS: The legal dispute in this case started when, on December 4, 2002, in the RTC at Pasig City, Aurelio K.
Litonjua, Jr. filed a suit against his brother Eduardo K. Litonjua, Sr and Robert T. Yang and several corporations
for specific performance and accounting. Yang, ' is impleaded because, as alleged in the complaint, he is a 'partner
of [Eduardo] and the [petitioner] in the Odeon Theater Investment which expanded through reinvestments of
profits and direct investments in several corporations.

Aurelio and Eduardo entered into a joint venture/partnership for the continuation of their family business and
common family funds. This joint venture/partnership agreement (JVA) was contained in a memorandum (Annex –
A-1).
 
The two agreed that in consideration of Aurelio's retaining his share in the remaining family businesses (mostly,
movie theaters, shipping and land development) and contributing his industry to the continued operation of these
businesses, Aurelio will be given P1 Million or 10% equity in all these businesses and those to be subsequently
acquired by them whichever is greater.

When the relations between Aurelio and Eduardo became sour, Aurelio requested for an accounting and
liquidation of his share in the JVA, but these demands were not heeded.

Eduardo contended that Aurelio had no cause of action such that the agreement forming the partnership had not
been a public instrument, and as such, is void for violating the provisions of Art. 1771, Art. 1772, Art. 1773 of the
NCC.

Yang moved to dismiss on the ground, inter alia, that, as to him, petitioner has no cause of action and the complaint
does not state any.
  
ISSUE: W/N petitioner and respondent are partners in the theatre, shipping and realty business.

RULING: NO. Considering that the allegations in the complaint showed that [petitioner] contributed immovable
properties (theatres, shipping land development) to the alleged partnership, the 'Memorandum’ which purports to
establish the said 'partnership/joint venture is NOT a public instrument and there was NO inventory of the
immovable property duly signed by the parties. As such, the said 'Memorandum ' is null and void for purposes of
establishing the existence of a valid contract of partnership. Indeed, because of the failure to comply with the
essential formalities of a valid contract, the purported 'partnership/joint venture is legally inexistent and it
produces no effect whatsoever.

Necessarily, a void or legally inexistent contract cannot be the source of any contractual or legal right. Accordingly,
the allegations in the complaint, including the actionable document attached thereto, clearly demonstrates that
[petitioner] has NO valid contractual or legal right which could be violated by the [individual respondents] herein. 

WHEREFORE , the instant petition is DENIED and the impugned Decision and Resolution of the Court of
Appeals AFFIRMED.

COELI
CASE NO. 52
Joint Venture
Primelink v. Lazatin-Magat, GR 167379 (2006)

LAZATIN sibs (Ma. Clara Lazatin-Magat, Jose Serafin, Jaime Lazatin and Jose Marcos)

FACTS: Primelink Properties and the Lazatin siblings entered into a joint venture agreement (JVA) whereby the
Lazatins shall contribute a huge parcel of land and Primelink shall develop the same into a subdivision to be known
as "Tagaytay Garden Villas."

Primelink undertook to contribute money, labor, personnel, machineries, equipment, etc. and They agreed to
draw allowances/advances in the ff: 60% for Primelink, 40% for Lazatins.

Lazatins agreed to subject the title over the subject property to an escrow agreement. For 4 years however,
Primelink failed to develop the said land. So the Lazatins filed a complaint to rescind the JVA. Lazatins also alleged
that Primelink defrauded them when the Primelink reduced the net income from sales of housing units in its
financial report.

RTC: ruled in favor of the Lazatins; ordered the rescission of the JVA; and that Primelink must return the
possession of said land to the Lazatins as well as the improvements that Primelink had over the property without
the Lazatins paying for said improvements CA: affirmed.

PRIMELINK argued that the LAZATINs in their complaint did not pray that the improvements be awarded to them.
They merely asked in the complaint that the JVA be rescinded, and that the parcels of land they contributed to the
project be returned to them.

ISSUE: W/N the improvements made by Primelink should also be turned over under the possession of the
Lazatins.

RULING: Yes. The order to return the property with all the improvements thereon is just a necessary consequence
to the order of rescission. As a general rule, the relation of the parties in joint ventures is governed by their
agreement. When the agreement is silent on any particular issue, the general principles of partnership may be
resorted to.

The legal concept of a joint venture is of common law origin. It has no precise legal definition, but it has been
generally understood to mean an organization formed for some temporary purpose. Partnership contemplates a
general business with some degree of continuity, while the joint venture is formed for the execution of a single
transaction, and is thus of a temporary nature.

The LAZATINs were able to establish fraud on the part of PRIMELINK which was a pattern of a scheme/plot to
reduce and eventually blot out the net incomes generated from sales of housing units.
The parcels of land, as well as the improvements made thereon, were contributed by the parties to the joint
venture under the JVA, hence, formed part of the assets of the joint venture.  Respondents were entitled to the
possession not only of the parcels of land but also of the improvements thereon as a consequence of petitioner’s
breach of their agreement and defrauded respondents of the net income under the JVA.

COELI
CASE NO. 53
Joint Venture
Aurbach v. Sanitary Wares, GR 75875 (1989)
FACTS:
Saniwares is a domestic corp manufacturing and marketing sanitary wares. One of the incorporators, Mr. Young
went abroad to look for foreign partners who could help in its expansion plans.

American Standard Inc (ASI), a foreign corp, entered into an “Agreement” with Saniwares and some Filipino
investors they all agreed to participate in the ownership of an enterprise which would engage primarily in the
business of manufacturing in the PH and selling here and abroad vitreous china and sanitary wares.

Under their Agreement, the management of the Corporation shall be vested in BODs, which shall consist of 9
individuals. As long as ASI shall own at least 30% of the outstanding stock, , 3 of the 9 directors shall be designated
by ASI, and the other 6 shall be designated by the other stockholders of the Corporation.

Later, the 30% capital stock of ASI was increased to 40%. At the annual stockholders meeting, disagreement arose
after 2 directors nominated for the PH investors were struck out. ASI claimed that since they had 40% of shares,
their cumulative voting power* allowed them to vote for a 4 th director. This was denied because according to
the JVA, ASI is only entitled to 3 directors.

These incidents triggered off the filing of separate petitions by the parties with the SEC. ASI contended that the
actual intention of the parties should be viewed strictly on the "Agreement" wherein it is clearly stated that the
parties' intention was to form a corporation and not a joint venture.

ISSUE: W/N the parties intended to form a corporation and not a joint venture.

RULING: NO. The parties agreed to establish a joint venture and not a corporation. Since the Agreement clearly
states the manner of voting for directors, ASI cannot claim to have the power to designate 4 directors when they
were only allowed 3. The ASI cannot claim that cumulative voting should be applied due to their corporate
character, because Saniwares is clearly a joint venture and not an ordinary corporation.

The legal concept of a joint venture is of common law origin. It has no precise legal definition but it has been
generally understood to mean an organization formed for some temporary  purpose. The main distinction cited by
most opinions in common law jurisdictions is that the partnership contemplates a general business with some
degree of continuity, while the joint venture is formed for the execution of a single transaction, and is thus of a
temporary nature.

 Under Philippine law, a joint venture is a form of partnership and should thus be governed by the law of
partnerships. 

*Under Corporation Law: Cumulative voting refers to the fact that a shareholder has votes that are equal to the
number of shares multiplied by the number of positions the shareholders are voting for.

Illustration:

If A owns 100 voting shares, and there are 5 directors to be elected, A is entitled to 500 votes which he may distribute
to candidate Y alone,
or to Y and Z giving the former 300 and the latter 200 provided that the total number of votes cast by him does not
exceed 500 votes.

ANGELO
CASE NO. 54
Joint Venture
Mendiola v. CA, NLRC, and Pacific Forest Resources, Philippines, Inc. (PACFOR)

FACTS: PACFOR is a corporation organized and existing under the laws of California. It is a subsidiary of Cellulose
Marketing International, a corporation duly organized under the laws of Sweden.

PACFOR entered into a Side Agreement on Representative Office in the Philippines with Arsenio T. Mendiola
where Mendiola will be its President. The Side Agreement outlines the business relationship of the parties with
regard to the Philippine operations of PACFOR. Mendiola’s base salary and the overhead expenditures shall be
borne by the representative office and funded by PACFOR or Mendiola, since PACFOR-Philippines is equally owned
on a 50-50 equity by Mendiola and PACFOR-USA.

The Side Agreement was amended through a Revised Operating and Profit Sharing Agreement where the salary of
Mendiola was increased to $78,000 per annum.

Mendiola wrote Kevin Daley, Vice President for Asia of PACFOR, seeking confirmation of his 50% equity of
PACFOR-Philippines. PACFOR, through William Gleason, its President, replied that Mendiola is not a part-owner
of PACFOR-Philippines because the latter is merely PACFOR-USA’s representative office and not an entity separate
and distinct from PACFOR-USA.

Mendiola claimed that he was all along made to believe that he was in a joint venture with them.

ISSUE: Whether a partnership or co-ownership exists between Mendiola and PACFOR-Philippines.

RULING: NO. Mendiola is not a part-owner of PACFOR-Philippines. In a partnership, the members become co-
owners of what is contributed to the firm capital through the efforts of the members. 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 between Mendiola and PACFOR-Philippines. The parties merely shared
profits. This alone does not make a partnership.

William Gleason, PACFOR’s President, established this fact when he said that PACFOR is simply a "theoretical
company" for the purpose of dividing the income 50-50. He stressed that Mendiola knew of this arrangement from
the very start, having been the one to propose to Pacfor the setting up of a representative office, and "not a branch
office" in the Philippines to save on taxes.

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.

Mendiola was constructively dismissed—

First, PACFOR-Philippines directed Mendiola to turn over to it all records of PACFOR-Philippines. This would
certainly make the work of Mendiola very difficult, if not impossible. Second, PACFOR-Philippines ordered
Mendiola to remit the Christmas giveaway fund intended for clients of PACFOR-Philippines. Then it ordered
Mendiola to transfer title and turn over to it the possession of the service car. Although there is no reduction of
the salary of petitioner, constructive dismissal is still present because continued employment of petitioner
is rendered, at the very least, unreasonable.
ANGELO
CASE NO. 55
Joint Venture
J. Tiosejo Investment Corporation v. Spouses Benjamin and Eleanor Ang

FACTS: J. Tiosejo Investment Corporation entered into a JVA with Primetown Property Group, Inc. (PPGI) for
the development of a residential condominium project to be known as The Meditel on Tiosejo’s property along
Samat St., Highway Hills, Mandaluyong. With Tiosejo contributing the property to the joint venture and Primetown
Property undertaking to develop the condominium, the JVA provided, among other terms and conditions, that the
developed units shall be shared by the former and the latter at a ratio of 17%-83%, respectively.

Primetown Property executed two contracts to sell with Spouses Benjamin and Eleanor Ang:

Contract to Sell No. 0212 over the condominium unit denominated as Unit A-1006, and
Contract to Sell No. 0214 over the parking space identified as Parking Slot No. 0405.

Spouses Ang filed a case for recission against Tiosejo and Primetown contending the non-completion of the project
and failure to turn-over the unit and parking space.

Primetown filed its answer alleging that the delay in the completion of the project was attributable to a force
majeure—economic crisis and the unexpected inflation.

Tiosejo filed its separate answer alleging that by the terms of the JVA, each party was individually responsible for
the marketing and sale of the units pertaining to its share, and that not being privy to the Contracts to Sell executed
by Primetown and Spouses Ang, it did not receive any portion of the payments made by the latter.

ISSUE: Whether Tiosejo can avoid liability by claiming that it was not privy to the Contracts to Sell executed by
Primetown and Spouses Ang.

RULING: NO. A joint venture is considered as a form of partnership and is governed by the law of
partnerships. Under Article 1824 of the Civil Code of the Philippines, all partners are solidarily liable with
the partnership for everything chargeable to the partnership, including loss or injury caused to a third
person or penalties incurred due to any wrongful act or omission of any partner acting in the ordinary
course of the business of the partnership or with the authority of his co-partners. Whether innocent or
guilty, all the partners are solidarily liable with the partnership itself.

Fred
CASE 57
IV. Rights of Partners: Mutual Agency
Stratemeyer v. West, 466 NE 2d 306

FACTS: Falconer is agent of West in A&L Farms partnership engaged in purchase and resale of farms.
Stratemeyer contracted with Falconer for the construction of grain bins in the farm owned by the partnership
where Stratemeyer would supply material and labor.
The dispute arose when the A&L partnership was dissolved for bankruptcy. West claimed that he only learned
about the contract after the dissolution of the A&L partnership. Falconer claimed that he spoke with West about
the bins on several occasions before making arrangements with Stratemeyer. Falconer testified that he and West
had made a decision that additional storage was needed.
Stratemeyer sued for recovery of money owed allegedly by West in the said construction contract. West
denied having known the said agreement of Falconer and Stratemeyer, thus he has no liability.
ISSUE: w/n West is bound by the acts of his agent Falconer, thus liable to Stratemeyer?
RULING: YES.
Every partner is an agent of the partnership for the purpose of its business, and the act of every partner, including
the execution in the partnership name of any instrument, for apparently carrying on in the usual way the business
of the partnership of which he is a member binds the partnership, unless the partner so acting has in fact no
authority to act for the partnership in the particular matter, and the person with whom he is dealing has
knowledge of the fact that he has no such authority." 
An act of a partner in apparently carrying on in the usual way the business of the partnership binds the
partnership unless he has no authority and the third party has knowledge that he has no authority.
The existence of the partnership having been admitted, proof of express authority was unnecessary. Rather, it was
defendant's burden to establish no authority and plaintiff's knowledge. Plaintiff, of course, must have established
that Falconer's act was apparently done in carrying on the business of the partnership in the usual way.
In this case, Falconer was given authority to generally manage the farms purchased, and no other evidence of
restricted authority was offered. Thus, it undoubtedly follows that West is bound by said acts which make him
liable.

ADDALINO
CASE NO 58.
Cook vs. Brundidge, Fountain, Elliot &Churchill
533 S.W.2d 751 February 11, 1976

FACTS:  Brundidge, Fountain, Elliott & Churchill is a partnership engaged in the practice of law in Dallas, Texas.
Warren C. Lyon was a partner of the law firm. He represented Betty L. Cook in a divorce proceeding; he also
prepared a will for her and for Isabelle Griffin, another plaintiff. Lyon was also engaged in the real estate business
and was an officer and stockholder in Texas Yummers, a Texas corporation.

During a conference with Lyon concerning her divorce, Cook informed Lyon that they (plaintiffs) were receiving
approximately $60,000 from the sale of some property, and asked him for suggestions of investment options. Lyon
suggested about Texas Yummers, a fastfood franchise operation based in California. Cook decided to invest in
Yummers and sent a check payable to “Warren Lyon as Attorney for Isabelle M. Griffin, Winifred Baker and
Betty Cook”. The check was received by Lyon at the office of the law firm but there is no showing that the funds
were deposited in or handled by or through any account of the law firm.

Later, Cook loaned to Texas Yummers Corporation a minimum of $50,000 to be used in the construction of a
Yummers store in Dallas. Lyon made and signed (as the Texas Yummers’ President) the contract, and
represented that, as their attorney, he could assure them that their interests were well protected . Because
the loan was not paid when due, Lyon persuaded Cook, et. al to exchange their rights under the loan for stock in
Texas Yummers. Betty L. Cook, et al, agreed to the conversion. However, Texas Yummers was thereafter adjudged
bankrupt. A suit was filed by Cook, seeking recovery of damages against the partnership law firm upon the theory
of vicarious liability for the acts of Lyon, a partner.

LAW FIRM: the only service Lyon performed as a partner was the handling of a divorce for Betty L. Cook and the
preparation of a will for her; and Lyon was acting in his individual capacity with respect to his real estate business
and as a stockholder in United States Franchise Corporation, and in Yummers.

COOK ET.AL,.: Defendant Lyon did not indicate that he was acting in any capacity other than as my attorney at law
or separate from the law firm of which he was a partner. Lyon represented them in several real estate cases.

ISSUE: May the plaintiffs hold the partnership vicariously liable

RULING: YES, BUT THIS CASE WAS REMANDED FOR TRIAL. There was no evidence that the firm expressly
authorized Lyon’s actions; nor was there evidence that his actions were outside of his authority as member of the
partnership. Hence, Lyon’s actions must be considered in the light of whether they were impliedly authorized by
the firm or appeared to carry on the usual business. The records do not definitely establish that the firm is not
accountable to Cook for Lyon’ acts. The burden of proof lies with the law firm.

Between partners themselves, and between the firm and persons dealing with the firm, it must be presumed that
each partner is the agent of the firm, empowered to carry out its objects, and to transact the business for which the
partnership was formed, in the usual and customary way pursued by other firms engaged in a like business; and, in
the absence of restrictions on this power, rights must be adjusted in view of its existence. Third persons dealing
with a member of a firm in reference to partnership matters, in the absence of power expressly conferred, must
recognize the fact that the partner's power to bind his firm is restricted to the doing of such things as are within
the scope of the particular business.

There are compelling and unique considerations with respect to partners engaged in the practice of law. The
fiducial obligations of a law partnership set it apart from commercial partnerships. Nevertheless, the provisions of
the Texas Code governing partnerships (art. 6132b) are expressly applicable to a professional partnership such as
one of law.

AIRA
NO. 67
Interest in the partnership
Bohonus vs. Amerco, 602 P.2d 469

NOTE: Arizona, US case. :( I’m not sure if full text yung nahanap ko but fits with the topic naman. Not found
in De Leon.

FACTS: Amerco secured a judgment against Bohonus and sought to enforce that judgment by judicial sale of
Bohonus' interest in a partnership. Trial court ordered the sale of partnership property to satisfy the individual
debt of Bohonus. Amerco, after it secured a judgment against Bohonus, sought a charging order from the court
pursuant to A.R.S. § 29-228 of the Uniform Partnership Act. The court granted the request for a charging order
and as a part of that order, mandated the sale of Bohonus’ interest in the assets and property of the
partnership business, including a spiritous liquor license.

A.R.S. § 29-228 reads, in pertinent part, as follows:

"A. On due application to a competent court by any judgment creditor of a partner, the court which entered the
judgment, order, or decree, or any other court, may charge the interest of the debtor partner with payment of the
unsatisfied amount of such judgment debt with interest thereon; and may then or later appoint a receiver of his
share of the profits, and of any other money due or to fall due to him in respect of the partnership, and make all
other orders, directions, accounts and inquiries which the debtor partner might have made, or which the
circumstances of the case may require."

ISSUE: Whether or not the sale ordered by the court regarding Bohonus’ assets in the partnership was proper.

RULING: NO. With the foregoing statute in mind, note that it is only a partner's interest in the partnership which
may be charged and, in some jurisdictions, sold. Amerco urges that somehow A.R.S. § 29-228(A) authorizes the sale
of partnership assets and property. The record reflects that pursuant to the provisions of the same statute, a
receiver has to be appointed. The fact of the receivership provision enforces the conclusion that only the "interest
in the partnership" may be charged and the Court finds no provision therein for sale of assets or property of the
partnership.

Martin
 Case No. 68
Interest in the Partnership (Articles 1812-1814)
First National Bank vs District Court| 652 P2d 613

Defendants (partners): Robert Sanders, Paul L. Sanders, Lawrence Sanders, J.W. Skinner, and Michael J. Bellamy.
Partnerships: Saddleback, Ltd.: (Robert, Lawrence and Paul Sanders only), Grassroots Co.: (Robert, Lawrence and Paul
Sanders only), Quadrangle, Ltd.: (all Defendants)
Case Nature: District court’s order authorizing execution sale VACATED.
Facts: The First National Bank of Denver brought suit on a demand promissory note executed by the five
defendants. The court rendered a judgment finding the defendants jointly and severally liable ($182,530.55). The
charging orders directed the partnerships (1) to pay the bank all present and future shares of all payments which
would have been paid to the respective named defendants for their interests in the partnerships until the judgment
was satisfied in full. Also, the partnerships were ordered (2) not to make capital acquisitions of property of the
judgment debtors, (3) not to loan money to nor pay any creditor of the judgment debtors, and (4) not to make a
sale or modification of partnership interests unless approval of the court or the judgment creditor was first
obtained. In addition, (5) all documents or partnership reports were to be sent to the judgment creditor, and (6) to
make available a copy of the partnership agreements and amendments, income tax returns for the past two years,
any balance sheet and profit and loss statements, and all books and records.

Defendants did not pay. Thus, the bank orally moved the court, in an ex parte hearing, for execution and sale of the
partnership interests, and asked in addition for an order restraining the judgment debtors from alienating the
property pending the sale. The court granted this motion.

Consequently, the defendants filed a motion for a stay of the execution pending the outcome of the other similar
case.
The court granted the motion and stayed execution, without hearing evidence or making findings. The bank now
seeks an order from this court prohibiting the district court from staying execution against the defendants.

The bank argues that the district court was without power to impair the judgment creditor's rights since there is
no allegation that the partnership interests are exempt from execution. While the judgment debtors (defendants),
on the other hand, argue that: (1) the sale of the partnership interests would affect the partnerships themselves as
well as other partners which are not parties to this action; and (2) that that they had no notice of either the oral
motion for execution or the hearing, and that the order for execution and sheriff's sale was entered without an
opportunity for them to be heard (the bank rebutted this by saying that the issuance of the writ of execution was a
ministerial act, that no notice to the defendants was required).

Issue: Whether or not it was proper to execute a judgment affecting partnership interests without giving the
partnership an opportunity to be heard.

Ruling: No. The Court agree with the defendants that the ex parte order for execution and sheriff's sale was
improperly entered because it was issued without due application to modify the court's earlier order charging the
partnership interests. Because of the nature of partnership property and the possible adverse impact that this sale
could have upon the nondefendant partners, if any, the court should have conducted another hearing under section
7-60-128 with proper notice to the affected parties, to determine the propriety of allowing an execution
sale of the partnership interests in lieu of payments of the debtor partners' share of partnership profits to
the judgment creditor. The substantive right of a judgment creditor to enforce collection of the judgment may be
statutorily limited, as in this case. Thus, partnership property may only be charged with payment of the judgment
debt after "due application" with notice and hearing.

CHAP
Case No. 70
Conveyance of Property in Partnership Name
Hodge v. Garett 614 P2d 420
NOTE: US Case. Case not found in De Leon.

FACTS: Rex E. Voeller, the managing partner of the PayOnt DriveIn Theatre, signed a contract for the sale of a
small parcel of land belonging to the partnership. That parcel of land, adjacent to the theater, was not used in the
theater operations. The trial court found that Voeller had actual and apparent authority to execute the contract on
behalf of the partnership despite that it had no finding that it was customary for Voeller to sell real property, or
even personal property, belonging to the partnership. The partners of the PayOnt DriveIn Theatre appealed,
arguing that Voeller did not have authority to sell the property.

Under their Uniform Partnership Act, if record title is in the partnership and a partner conveys in the partnership
name, legal title passes. But the partnership may recover the property (except from a bona fide purchaser from the
grantee) if it can show (A) that the conveying partner was not apparently carrying on business in the usual way or
(B) that he had in fact no authority and the grantee had knowledge of that fact. The burden of proof with respect to
authority is thus on the partnership.

The trial court ruled that the transaction was unauthorized.

ISSUE: Was the transaction made by Voeller authorized?

RULING: NO. There was no evidence that Voeller had sold property belonging to the partnership in the past, and
obviously the partnership was not engaged in the business of buying and selling real estate. For a theater, "carrying
on in the usual way the business of the partnership," means running the operations of the theater; it does not mean
selling a parcel of property adjacent to the theater.

Here the contract of sale stated that the land belonged to the partnership, and, even if Hodge believed that Voeller
as the exclusive manager had authority to transact all business for the firm, Voeller still could not bind the
partnership through a unilateral act which was not in the usual business of the partnership.

Dissenting opinion, Justice Shepard:

It should be noted that the question might have been resolved by reference to the articles of partnership. The lack
of the introduction of those articles or any reference to specific parts thereof may well have led to conclude that
the defendants had failed to carry their burden of proof regarding the lack of authority in Voeller. The record is
clear that the partnership did purchase real property, that the partnership did sell real property, and that Voeller
himself, on behalf of the partnership, engaged in the rental of property to other persons, including the leasing of
the theatre operation in Lovelock, Nevada. On this basis, I cannot agree with the majority's characterization of this
partnership, but again would agree with the trial judge in his undoubted conclusion, albeit unstated, that the
partnership failed to carry its burden of proof that the transaction in question here was outside the authority of
Voeller and outside the usual and ordinary course of business of the partnership.

KARLY CASE NO. 71

CONVEYANCE OF PROPERTY IN PARTNERSHIP NAME
BACKOWSKI vs. SOLECKI, 316 N.W.2d 434

FACTS: H.S. & L. Investment Co. is a Michigan partnership. The partners were Henry Solecki, and plaintiff, Stephen
Backowski. The partnership is engaged in business of buying and leasing of warehouse space.

PETITIONER STEPHEN BACKOWSKI sought to enjoin RESPONDENT HENRY SOLECKI from distributing
partnership assets and sought an order for an accounting. During the pendency of the case, Solecki executed a
quitclaim deed and an assignment of the land contract purportedly on behalf of H.S. & L. in favor of Bilmax
Properties. Petitioner filed a motion alleging that the assignment of the land contract to Billmax Properties
and the quitclaim deed were executed without his consent. At this time, Solecki also signed an affidavit
warranting his authority to act on behalf of H.S. & L. in this matter; Solecki paid the delinquent land contract
payments and the back taxes; Solecki received a check in the name of H.S. & L. for $10,000.

TRIAL JUDGE - title to the property should remain in defendant Billmax. Petitioner ought to have the sale of the
warehouse property set aside and the property returned to the partnership. Hence, this appeal.

ISSUE: WON the conveyance of property in the partnership name in favor to Billmax Properties is valid.

RULING: NO. The Court remand the case to the trial court for further findings of fact, most especially, on how the
trial judge came to conclude that title to the property should remain in Billmax when it was apparently found that
the sale of the property by Solecki to Billmax was "without legal efficacy."

It is undisputed that the title to the property involved herein was in the partnership name and that Solecki,
a partner, conveyed title to such property by a conveyance executed in the partnership name. Section 9 of
the Uniform Partnership Act provides that an act of a partner which is not apparently for the carrying on of the
business of the partnership in the usual way does not bind the partnership unless authorized by the other
partners. Also, Section 10 of the Uniform Partnership Act, further indicates that the partnership may, at its option,
recover the property unless (a) the partner's act binds the partnership or (b) the property has been conveyed to a
bona fide purchaser.

Billmax, the grantee, has not conveyed the property. As to Solecki’s act binding the partnership, he made
statements which would support Backowski’s position that his act does not bind the partnership. At other times
he made statements contradicting this testimony.

WEE
Case No. 85
Liable for Partnership Contracts
Muñasque v. CA ∣ G.R. No. L-39780, 11 November 1985

NATURE OF THE CASE: Petition for certiorari, the petitioner seeks to annul and set added the decision of the CA.
Affirmed with modifications.

FACTS: Petitioner Elmo Muñasque, in behalf of the partnership of "Galan and Muñasque", as Contractor entered
into a written contract with respondent Tropical for the remodelling of respondent's Cebu branch building. A
total amount of Php25,000.00 was to be paid under the contract for the entire services of the Contractor. (30% of
which was to be paid upon the signing of the contract and the balance thereof divided into three equal installments
of Php6,000.00 every 15 working days)

The first payment made by Tropical was in the form of a check in the name of the petitioner. This was indorsed by
the same to respondent Celestino Galan to be deposited in the bank and for payment of materials and labor used
in the project. Petitioner alleged that Galan misappropriated a significant portion of the check for his personal use,
thus petitioner withheld the second check from Galan.

Galan then informed Tropical that there was a "misunderstanding" between him and petitioner, thereafter Tropical
changed the name of the payee in the second check from Muñ asque to "Galan and Associates" which enabled Galan
to encash the second check. Meanwhile, as alleged by the petitioner, the construction continued through his sole
efforts. He stated that he borrowed a significant amount from his friend for the payment of the expenses incurred
for the construction work. The two remaining checks were subsequently given to the petitioner alone with the last
check being given pursuant to a court order.
Petitioner filed a complaint for payment of sum of money and damages against the respondents, seeking to recover
sum amount of money and damages. Both the trial and appellate courts absolved Tropical from any liability but
held the petitioner, together with Galan, liable to the intervenors Cebu Southern Hardware Company and Blue
Diamond Glass Palace for the credit which the intervenors extended to the partnership of petitioner and Galan.
Hence, this petition. Petitioner contends that Galan should be the only one held liable granting his acts of
misappropriation.

ISSUE: Whether or not the amounts payable to the intervenors should be shouldered exclusively by Galan.

RULING: NO. If there was a falling out or misunderstanding between the partners, such does not convert
the partnership into a sham organization. Article 1816 of the Civil Code should be construed together with
Article 1824. While the liability of the partners are merely joint in transactions entered into by the partnership, a
third person who transacted with said partnership can hold the partners solidarily liable for the whole obligation if
the case of the third person falls under Articles 1822 or 1823. The obligation is solidary, because the law protects
him, who in good faith relied upon the authority of a partner, whether such authority is real or apparent. That is
why under Article 1824 of the Civil Code all partners, whether innocent or guilty, as well as the legal entities which
is the partnership, are solidarily liable.

Thus, it is but fair that the consequences of any wrongful act committed by any of the partners therein should be
answered solidarily by all the partners and the partnership as a whole. However, as between the partners
Muñ asque and Galan, justice also dictates that Muñ asque be reimbursed by Galan for the payments made by the
former representing the liability of their partnership to herein intervenors, as it was satisfactorily established that
Galan acted in bad faith in his dealings with Muñ asque as a partner.