Teague vs Martin

It was alleged, among others, by the plaintiff that he and the defendants formed a
partnership for the operation of a fish business and similar commercial transactions,
which by mutual consent was called "Malangpaya Fish Co.," with a capital of P35,000, of
which plaintiff paid P25,000, the defendants Martin P5,000, Maddy P2,500, and Golucke
P2,500; that he was named the general partner; that the share in the profits and losses is in
proportion to the amount of contributed capital; that there was no agreement as to the
duration of the partnership; that he wants to dissolve it, but the defendants refused to do
so; that the partnership purchased and owns a lighter (Lapu-Lapu), a motorship
(Barracuda), and other properties, which are in the possession of the defendants who are
making use of them. It was alleged that it is the best interest of the parties to have a
receiver appointed pending this litigation, to take possession of the properties, and he
prays that the Philippine Trust Company be appointed receiver, and for judgment
dissolving the partnership, with costs.
Each of the defendants filed a separate answer, but of the same nature. It is then alleged,
among others, that Maddy will have charge of the Barracuda and the navigating of the
same, salary P300 per month; Martin will have charge of the southern station, cold stores,
commissary and procuring fish, salary P300 per month; Teague will have charge of
selling fish in Manila and purchasing supplies. No salary until business is on paying
basis.
The CFI issued a decision: (1) dissolving the partnership and liquidating its assets; (2)
that the barge Lapu-Lapu as well as the Ford truck and adding machine belong
exclusively to Teague, but he must return to and reimburse the partnership the amount
which was taken from its funds for the purchase of the Lapu-Lapu and the Ford truck.
Upon appeal, the plaintiff further contended that he is the managing partner of the
partnership and the three properties (Lapu-Lapu, Barracuda & Ford truck) are properties
of the partnership since they were paid from the profits of the partnership thus do not
belong to him.
ISSUES:
WON the plaintiff was the manager of the unregistered partnership of Malangpaya Fish
Company.
WON the three properties are owned by the partnership.
RULING:
Yes, the powers and duties of the three partners are specifically defined, and that each of
them was more or less the general manager in his particular part of the business. The
plaintiff’s powers and duties were confined and limited to "selling fish in Manila and the
purchase of supplies."
No, the Lapu-Lapu, Barracuda, and the adding machine, although paid for by the
partnership funds, are owned by petitioner for it was registered in his own name. He is
estopped from claiming otherwise. The purchase of the properties in question are not
within the scope of plaintiff’s authority. It is but right that the plaintiff reimburse the
partnership for the use of its funds. However, it noted that the partnership also made use
of the Lapu-Lapu. In the interest of justice, the plaintiff should be compensated for such
use.

PEDRO MARTINEZ, plaintiff-appellee,
vs.
ONG PONG CO and ONG LAY, defendants.
ONG PONG CO., appellant.
Fernando de la Cantera for appellant.
O'Brien and DeWitt for appellee.
ARELLANO, C.J.:
On the 12th of December, 1900, the plaintiff herein delivered P1,500 to the defendants
who, in a private document, acknowledged that they had received the same with the
agreement, as stated by them, "that we are to invest the amount in a store, the profits or
losses of which we are to divide with the former, in equal shares."
The plaintiff filed a complaint on April 25, 1907, in order to compel the defendants to
render him an accounting of the partnership as agreed to, or else to refund him the P1,500
that he had given them for the said purpose. Ong Pong Co alone appeared to answer the
complaint; he admitted the fact of the agreement and the delivery to him and to Ong Lay
of the P1,500 for the purpose aforesaid, but he alleged that Ong Lay, who was then
deceased, was the one who had managed the business, and that nothing had resulted
therefrom save the loss of the capital of P1,500, to which loss the plaintiff agreed.
The judge of the Court of First Instance of the city of Manila who tried the case ordered
Ong Pong Co to return to the plaintiff one-half of the said capital of P1,500 which,
together with Ong Lay, he had received from the plaintiff, to wit, P750, plus P90 as one-
half of the profits, calculated at the rate of 12 per cent per annum for the six months that
the store was supposed to have been open, both sums in Philippine currency, making a
total of P840, with legal interest thereon at the rate of 6 per cent per annum, from the 12th
of June, 1901, when the business terminated and on which date he ought to have returned
the said amount to the plaintiff, until the full payment thereof with costs.
From this judgment Ong Pong Co appealed to this court, and assigned the following
errors:
1. For not having taken into consideration the fact that the reason for the closing of the
store was the ejectment from the premises occupied by it.
2. For not having considered the fact that there were losses.
3. For holding that there should have been profits.
4. For having applied article 1138 of the Civil Code.
5. and 6. For holding that the capital ought to have yielded profits, and that the latter
should be calculated 12 per cent per annum; and
7. The findings of the ejectment.
As to the first assignment of error, the fact that the store was closed by virtue of
ejectment proceedings is of no importance for the effects of the suit. The whole action is
based upon the fact that the defendants received certain capital from the plaintiff for the
purpose of organizing a company; they, according to the agreement, were to handle the
said money and invest it in a store which was the object of the association; they, in the
absence of a special agreement vesting in one sole person the management of the
business, were the actual administrators thereof; as such administrators they were the
agent of the company and incurred the liabilities peculiar to every agent, among which is
that of rendering account to the principal of their transactions, and paying him everything
they may have received by virtue of the mandatum. (Arts. 1695 and 1720, Civil Code.)
Neither of them has rendered such account nor proven the losses referred to by Ong Pong
Co; they are therefore obliged to refund the money that they received for the purpose of
establishing the said store — the object of the association. This was the principal
pronouncement of the judgment.
With regard to the second and third assignments of error, this court, like the court below,
finds no evidence that the entire capital or any part thereof was lost. It is no evidence of
such loss to aver, without proof, that the effects of the store were ejected. Even though
this were proven, it could not be inferred therefrom t
hat the ejectment was due to the fact that no rents were paid, and that the rent was not
paid on account of the loss of the capital belonging to the enterprise.
With regard to the possible profits, the finding of the court below are based on the
statements of the defendant Ong Pong Co, to the effect that "there were some profits, but
not large ones." This court, however, does not find that the amount thereof has been
proven, nor deem it possible to estimate them to be a certain sum, and for a given period
of time; hence, it can not admit the estimate, made in the judgment, of 12 per cent per
annum for the period of six months.
Inasmuch as in this case nothing appears other than the failure to fulfill an obligation on
the part of a partner who acted as agent in receiving money for a given purpose, for
which he has rendered no accounting, such agent is responsible only for the losses which,
by a violation of the provisions of the law, he incurred. This being an obligation to pay in
cash, there are no other losses than the legal interest, which interest is not due except
from the time of the judicial demand, or, in the present case, from the filing of the
complaint. (Arts. 1108 and 1100, Civil Code.) We do not consider that article 1688 is
applicable in this case, in so far as it provides "that the partnership is liable to every
partner for the amounts he may have disbursed on account of the same and for the proper
interest," for the reason that no other money than that contributed as is involved.
As in the partnership there were two administrators or agents liable for the above-named
amount, article 1138 of the Civil Code has been invoked; this latter deals with debts of a
partnership where the obligation is not a joint one, as is likewise provided by article 1723
of said code with respect to the liability of two or more agents with respect to the return
of the money that they received from their principal. Therefore, the other errors assigned
have not been committed.
In view of the foregoing judgment appealed from is hereby affirmed, provided, however,
that the defendant Ong Pong Co shall only pay the plaintiff the sum of P750 with the
legal interest thereon at the rate of 6 per cent per annum from the time of the filing of the
complaint, and the costs, without special ruling as to the costs of this instance. So
ordered.
Torres, Johnson, Carson, and Moreland, JJ., concur.
CHOITHRAM JETHMAL RAMNANI et.al. vs CA
FACTS:

 Ishwar Jethmal Ramnani and his wife Sonya had their main business based in New
York. Ishwar received US $150,000.00 from his father-in-law in Switzerland. In 1965,
Ishwar Jethmal Ramnani sent the amount of US $150,000.00 to Choithram in two bank
drafts of US$65,000.00 and US$85,000.00 for the purpose of investing the same in real
estate in the Philippines. Subsequently, spouses Ishwar executed a general power of
attorney appointing Ishwar’s full blood brothers Choithram and Navalrai as attorneys-
in-fact, empowering them to manage and conduct their business concerns in the
Philippines. Choithram, as attorney-in-factr, entered into two agreements for the
purchase of two parcels of land located in Pasig Rizal from Ortigas & Company, Ltd.
Partnership (Ortigas Ltd.) with a total area of approximately 10,048 square meters.
Three buildings were constructed thereon and were leased out by Choithram as
attorney-in-fact of spouses Ishwar. Two of these buildings were later burned. 

In 1970 Ishwar asked Choithram to account for the income and expenses relative to
these properties during the period 1967 to 1970. Choithram failed and refused to render
such accounting which prompted Ishwar to revoke the general power of attorney.
Choithram and Ortigas Ltd. were duly notified by notice in writing of such revocation. It
was also registered with the Securities and Exchange Commission and published in The
Manila Times. Nevertheless, Choithram as such attorney-in-fact of Ishwar, transferred
all rights and interests of Ishwar spouses in favor of Nirmla Ramnani, the wife of
Choitram’s son, Moti. Ortigas also executed the corresponding deeds of sale in favor of
Nirmla and the TCT ISSUEd in her favour. Thus, spouses Ishwar filed a complaint in the
Court of First Instance of Rizal against Choithram and spouses Nirmla and Moti
(Choithram et al.) and Ortigas Ltd. for reconveyance of said properties or payment of its
value and damages.

Issue: 
Whether a partnership was formed?

Held: 

The Court held that there was a partnership formed. Even without a written agreement,
the scenario is clear. Spouses Ishwar supplied the capital of $150,000.00 for the
business. They entrusted the money to Choithram to invest in a profitable business
venture in the Philippines. For this purpose they appointed Choithram as their attorney-
in-fact. We have a situation where two brothers engaged in a business venture. One
furnished the capital, the other contributed his industry and talent. Justice and equity
dictate that the two share equally the fruit of their joint investment and efforts. 
RAMNANI v. CA
196 scra 731; May 7, 1991
Ponente: J. Gancayco

FACTS:
         
Ishwar, Choithram and Navalrai, all surnamed Jethmal Ramnani, are brothers of the full
blood. Ishwar and his spouse Sonya had their main business based in New York.
Realizing the difficulty of managing their investments in the Philippines they executed a
general power of attorney on January 24, 1966 appointing Navalrai and Choithram as
attorneys-in-fact, empowering them to manage and conduct their business concern in
the Philippines

On February 1, 1966 and on May 16, 1966, Choithram entered into two agreements for
the purchase of two parcels of land located in Barrio Ugong, Pasig, Rizal, from Ortigas
& Company, Ltd. Partnership. A building was constructed thereon by Choithram in
1966. Three other buildings were built thereon by Choithram through a loan of
P100,000.00 obtained from the Merchants Bank as well as the income derived from the
first building.

Sometime in 1970 Ishwar asked Choithram to account for the income and expenses
relative to these properties during the period 1967 to 1970. Choithram failed and
refused to render such accounting. Thereafter, Ishwar revoked the general power of
attorney. Choithram and Ortigas were duly notified of such revocation on April 1, 1971
and May 24, 1971, respectively. Said notice was also registered with the Securities and
Exchange Commission on March 29, 1971 and was published in the April 2, 1971 issue
of The Manila Times for the information of the general public. 
Nevertheless, Choithram, transferred all rights and interests of Ishwar and Sonya in
favor of his daughter-in-law, Nirmla Ramnani, on February 19, 1973.

On October 6, 1982, Ishwar and Sonya filed a complaint against Choitram and/or
spouses Nirmla and Moti and Ortigas for reconveyance of said properties or payment of
its value and damages.

ISSUE:
         
          Whether Ishram can recover the entire properties subject in the ligitation

HELD:
         
          No, Ishram cannot recover the entire properties subject.

          The Supreme Court held that despite the fact that Choithram, et al., have
committed acts which demonstrate their bad faith and scheme to defraud spouses
Ishwar and Sonya of their rightful share in the properties in litigation, the Court cannot
ignore the fact that Choithram must have been motivated by a strong conviction that as
the industrial partner in the acquisition of said assets he has as much claim to said
properties as Ishwar, the capitalist partner in the joint venture.
         
Choithram in turn decided to invest in the real estate business. He bought the two (2)
parcels of land in question from Ortigas as attorney-in-fact of Ishwar. Instead of paying
for the lots in cash, he paid in installments and used the balance of the capital entrusted
to him, plus a loan, to build two buildings. Although the buildings were burned later,
Choithram was able to build two other buildings on the property. He rented them out
and collected the rentals. Through the industry and genius of Choithram, Ishwar's
property was developed and improved into what it is now.
    
         Justice and equity dictate that the two share equally the fruit of their joint
investment and efforts. Perhaps this Solomonic solution may pave the way towards their
reconciliation. Both would stand to gain. No one would end up the loser. After all, blood
is thicker than water.

Moran Jr. v. CA
Facts:
On February 22, 1971 Pecson and Moran entered into an agreement whereby both
would contribute P15,000 each for the purpose of printing 95,000 posters featuring the
delegates to the 1971 Constitutional Convention, with Moran actually supervising the
work; that Pecson would receive a commission of P1,000 a month starting on April 15,
1971 up to December 15, 1971; that on December 15, 1971, a liquidation of the
accounts in the distribution and printing of the 95,000 posters would be made; that
Pecson gave Moran P10,000 for which the latter issued a receipt; that only a few
posters were printed; that on or about May 28, 1971, Moran executed in favor of Pecson
a promissory note in the amount of P20,000 payable in two equal installments (P10,000
payable on or before June 15, 1971 and P10,000 payable on or before June 30, 1971),
the whole sum becoming due upon default in the payment of the first installment on the
date due, complete with the costs of collection."

Pecson filed with the CFI of Manila alleging that: (1) on the alleged partnership
agreement, the return of his contribution of P10,000.00, payment of his share in the
profits that the partnership would have earned, and, payment of unpaid commission; (2)
on the alleged promissory note, payment of the sum of P20,000.00; and, (3) moral and
exemplary damages and attorney's fees. CFI held that ordering defendant Isabelo C.
Moran, Jr. to return to plaintiff Mariano E. Pecson the sum of P17,000.00, with interest
at the legal rate from the filing of the complaint on June 19, 1972. Parties appealed to
the CA which rendered a decision against the petitioner to pay: Forty-seven thousand
five hundred (P47,500) (the amount that could have accrued to Pecson under their
agreement); (b) Eight thousand (P8,000), (the commission for eight months); (c) Seven
thousand (P7,000) (as a return of Pecson's investment for the Veteran's Project); and
(d) Legal interest on (a), (b) and (c) from the date the complaint was filed (up to the time
payment is made).
Issues:
Whether or not CA grievously erred in holding petitioner liable to respondent in the sum
of P47,500 as the supposed expected profits due him;

Whether or not CA grievously erred in holding petitioner liable to respondent in the sum
of P8,000, as supposed commission in the partnership arising out of Pecson's
investment;

Whether or not CA grievously erred in holding petitioner liable to respondent in the sum
of P7,000 as a supposed return of investment in a magazine venture.

Held:
The rule is, when a partner who has undertaken to contribute a sum of money fails to do
so, he becomes a debtor of the partnership for whatever he may have promised to
contribute and for interests and damages from the time he should have complied with
his obligation. Thus in Uy v. Puzon (19 SCRA 598), which interpreted Art. 2200 of the
Civil Code of the Philippines, the Court allowed a total of P200,000.00 compensatory
damages in favor of the appellee because the appellant therein was remiss in his
obligations as a partner and as prime contractor of the construction projects in question.

Being a contract of partnership, each partner must share in the profits and losses of the
venture. That is the essence of a partnership. And even with an assurance made by one
of the partners that they would earn a huge amount of profits, in the absence of fraud,
the other partner cannot claim a right to recover the highly speculative profits. It is a rare
business venture guaranteed to give 100% profits. The records show that the private
respondent gave P10,000.00 to the petitioner. The latter used this amount for the
printing of 2,000 posters at a cost of P2.00 per poster or a total printing cost of
P4,000.00. The records further show that the 2,000 copies were sold at P5.00 each.
The gross income therefore w as P10,000.00. Deducting the printing costs of P4,000.00
from the gross income of P10,000.00 and with no evidence on the cost of distribution,
the net profits amount to only P6,000.00. Relative to the second alleged error, the
petitioner submits that the award of P8,000.00 as Pecson's supposed commission has
no justifiable basis in law. The partnership agreement stipulated that the petitioner
would give the private respondent a monthly commission of P1,000.00 from April 15,
1971 to December 15, 1971 for a total of eight monthly commissions. The agreement
does not state the basis of the commission. The payment of the commission could only
have been predicated on relatively extravagant profits.
There is misapprehension of facts. The evidence of the private respondent himself
shows that his investment in the "Voice of Veterans" project amounted to only
P3,000.00. The remaining P4,000.00 was the amount of profit that the private
respondent expected to receive.
The respondent court erred when it concluded that the project never left the ground
because the project did take place. Only it failed. It was the private respondent himself
who presented a copy of the book entitled "Voice of the Veterans" in the lower court as
Exhibit "L". Therefore, it would be error to state that the project never took place and on
this basis decree the return of the private respondent's investment.