G.R. No.

85494 May 7, 1991

RAMNANI, petitioners, vs. COURT OF APPEALS, respondents.

Facts:
This case involves the bitter quarrel of two brothers over two (2) parcels of land and its improvements now worth a fortune.

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 appointing Navalrai and Choithram as attorneys-in-fact, empowering them to manage
and conduct their business concern in the Philippines. 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.

Choithram in turn decided to invest in the real estate business. He bought the two (2) parcels of land located in Barrio Ugong
Pasig, Rizal, from Ortigas in 1966 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—a
valuable asset worth millions of pesos.

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. As a consequenceIshwar revoked the general
power of attorney. Choithram and Ortigas were duly notified of such revocation and said notice was also registered with the
Securities and Exchange Commission and was published in The Manila Times for the information of the general public.

Nevertheless, Choithram as such attorney-in-fact of Ishwar, transferred all rights and interests of Ishwar and Sonya in favor of
his daughter-in-law, Nirmla Ramnani. Her husband is Moti, son of Choithram. Upon complete payment of the lots, Ortigas
executed the corresponding deeds of sale in favor of Nirmla. Transfer Certificates of Title of the Register of Deeds of Rizal
were issued in her favor.

Thus, on October 6, 1982, Ishwar and Sonya filed a complaint in the Court of First Instance of Rizal against Choithram and/or
spouses Nirmla and Moti and Ortigas for reconveyance of said properties or payment of its value and damages.

Issue:
WON there exist a partnership between Ishwar and Choithram thus entitling the latter for a share in the business.

Held:
Yes. It held that under the peculiar circumstances and 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.

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.
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.

However, the Court cannot just close its eyes to the devious machinations and schemes that Choithram employed in
attempting to dispose of, if not dissipate, the properties to deprive spouses Ishwar of any possible means to recover any
award the Court may grant in their favor. Since Choithram, et al. acted with evident bad faith and malice, they should pay
moral and exemplary damages as well as attorney's fees to spouses Ishwar.
 G.R. No. 94285           August 31, 1999

JESUS SY, petitioners, vs. THE COURT OF APPEALS, respondents.

Facts:
Sy Yong Hu & Sons is a partnership of Sy Yong Hu(+) and his sons, Jose Sy(+), Jayme Sy, Marciano Sy(+), Willie Sy, Vicente Sy
(+), and Jesus Sy, registered with the SEC on March 29, 1962, with Jose Sy as managing partner. Partners Sy Yong Hu, Jose Sy,
Vicente Sy, and Marciano Sy were all dead. Sometime in September, 1977, during the lifetime of all the partners, Keng Sian
brought an action, against the partnership as well as against the individual partners for accounting of all the properties
allegedly owned in common by Sy Yong Hu and the plaintiff (Keng Sian), and for the delivery or reconveyance of her one-half
(1/2) share in said properties and in the fruits thereof. Keng Sian averred that she was the common law wife of partner Sy
Yong Hu, that Sy Yong Hu, together with his children, who were partners in the partnership, connived to deprive her of her
share in the properties acquired during her cohabitation with Sy Yong Hu, by diverting such properties to the partnership.

In their answer, the defendants, including Sy Yong Hu himself, countered that Keng Sian is only a house helper of Sy Yong Hu
and his wife, subject properties "are exclusively owned by defendant partnership, and plaintiff has absolutely no right to or
interest therein." During the pendency of said civil case, Marciano Sy filed a petition for declaratory relief against partners
Vicente Sy, Jesus Sy and Jayme Sy, praying that he be appointed managing partner of the partnership, to replace Jose Sy who
died on August 12, 1978. Answering the petition, Vicente Sy, Jesus Sy and Jaime Sy, who claim to represent the majority
interest in the partnership, sought the dissolution of the partnership and the appointment of Vicente Sy as managing partner.

In due time, Hearing Officer Emmanuel Sison came out with a decision dismissing the petition, dissolving the partnership and
naming Jesus Sy, in lieu of Vicente Sy who had died earlier, as the managing partner in charge of winding the affairs of the
partnership. Sison approved a partial partition of certain partnership assets. In the meantime, the RTC appointed one Felix
Ferrer as a Special Administrator for the Intestate Estate of Sy Yong Hu, who moved to intervene in the proceedings for the
partition and distribution of the partnership assets, on behalf of the respondent Intestate Estate. However, Sison denied such
motion and upholding the order of dissolution of the partnership, had long become final and executory. Hearing Officer
Tongco came out with an order placing the partnership under a receivership committee. Petitioners appealed before the CA,
which ordered the partition and distribution of the partnership properties. However, the CA reversed its decision and
remanding the case to the SEC for the formation of a receivership committee. On appeal, respondent contended that the CA
erred in reinstating the Tongco order, which had suspended the dissolution of the partnership and the distribution of its
assets, and in placing the partnership properties under receivership.

Issue:
WON the placing of the partnership under receivership automatically dissolved the partnership.

Held:
NO. The dissolution of a partnership is the change in the relation of the parties caused by any partner ceasing to be
associated in the carrying on, as might be distinguished from the winding up, of its business. Upon its dissolution, the
partnership continues and its legal personality is retained until the complete winding up of its business culminating in its
termination. The dissolution of the partnership did not mean that the juridical entity was immediately terminated and that
the distribution of the assets to its partners should perfunctorily follow. On the contrary, the dissolution simply effected a
change in the relationship among the partners. The partnership, although dissolved, continues to exist until its termination, at
which time the winding up of its affairs should have been completed and the net partnership assets are partitioned and
distributed to the partners.
Thus, the disputed order placing the partnership under a receivership committee cannot be said to have varied the final order
of dissolution. Neither did it suspend the dissolution of the partnership. If at all, it only suspended the partition and
distribution of the partnership assets pending disposition on the basis of the agreement by the parties and under the
circumstances of the case. It bears stressing that, like the appointment of a manager in charge of the winding up of the affairs
of the partnership, said appointment of a receiver during the pendency of the dissolution is interlocutory in nature, well
within the jurisdiction of the SEC. Furthermore, having agreed with the respondents not to dispose of the partnership assets,
petitioners effectively consented to the suspension of the winding up or, more specifically, the partition and distribution of
subject assets. Petitioners are now estopped from questioning the order of the Hearing Officer issued in accordance with the
said agreement.

G.R. No. 126881       October 3, 2000

 HEIRS OF TAN ENG KEE, petitioners, vs. CA and BENGUET LUMBER COMPANY, represented by its President TAN ENG LAY,
respondents.

Facts:
When Tan Eng Kee died his heirs , Matilde Abubo, the common-law spouse of the decedent, joined by their children Teresita,
Nena, Clarita, Carlos, Corazon and Elpidio filed suit against the decedent's brother TAN ENG LAY on for accounting, liquidation
and winding up of the alleged partnership formed after World War II between Tan Eng Kee and Tan Eng Lay, and the equal
division of the net assets of Benguet Lumber. The petitioners filed an amended complaint impleading private respondent
BENGUET LUMBER COMPANY, as represented by Tan Eng Lay.

The amended complaint principally alleged that after the second World War, Tan Eng Kee and Tan Eng Lay, pooling their
resources and industry together, entered into a partnership engaged in the business of selling lumber and hardware and
construction supplies. They named their enterprise "Benguet Lumber" which they jointly managed until Tan Eng Kee's death.
Petitioners herein averred that the business prospered due to the hard work and thrift of the alleged partners. However, they
claimed that Tan Eng Lay and his children caused the conversion of the partnership "Benguet Lumber" into a corporation
called "Benguet Lumber Company." The incorporation was purportedly a ruse to deprive Tan Eng Kee and his heirs of their
rightful participation in the profits of the business.

After trial, Regional Trial Court of Baguio City decided in favor of the petitioners but reversed on appeal. Petitioners' motion
for reconsideration was denied by the Court of Appeals hence, the present petition.

Issue:
WON there exist a patnership between petitioner and respondent entitling the petitioners for their prayer.

Held:
The SC said there is no partnership. It concluded that Tan Eng Kee was only an employee, not a partner. Petitioners did not
present and offer evidence that would show that Tan Eng Kee received amounts of money allegedly representing his share in
the profits of the enterprise. Petitioners failed to show how much their father, Tan Eng Kee, received, if any, as his share in
the profits of Benguet Lumber Company for any particular period. Hence, they failed to prove that Tan Eng Kee and Tan Eng
Lay intended to divide the profits of the business between themselves, which is one of the essential features of a partnership.

The SC was not convinced that the likelihood of Tang Eng Kee as a member of the family, he occupied a niche above the rank-
and-file employees. He would have enjoyed liberties otherwise unavailable were he not kin, such as his residence in the
Benguet Lumber Company compound. He would have moral, if not actual, superiority over his fellow employees, thereby
entitling him to exercise powers of supervision. It may even be that among his duties is to place orders with suppliers. The
circumstances proffered do not provide a logical nexus to the conclusion that Tang Eng Kee is a partner. These are not
inconsistent with the powers and duties of a manager, even in a business organized and run as informally as Benguet Lumber
Company.

G.R. No. 133495 Promulgated: December 11, 2000

 GENARO CORDIAL, Petitioner, vs. DAVID MIRANDA, Respondent.

Facts:
Respondent Miranda, a businessman from Angeles City, was engaged in rattan business. Among his many regular suppliers were Roberto
Savilla, Roberto Santiago, and in 1990 one Gener Buelva. Petitioner Cordial was introduced to Miranda by Cecilia Buelva, wife of Gener.
When they were introduced, Cordial proposed to deliver rattan to Miranda, which the latter allegedly agreed to be supplied with rattan
poles. Miranda allegedly informed Cordial to see Roberto Savilla, his long time supplier regarding forest license because Savilla holds a
forestry concession in Palawan. Upon meeting Savilla, who agreed to permit Cordial to use Savilla’s license in Palawan subject to payment
of royalty fees forestry concession, Cordial went to Palawan and established his buying station in New Ibahay, El indo, Palawan, where he
found Jaime Cariño, Joel Savilla and Oning Villaraza, who supplied him rattan poles.

Having started buying on June 30, 1992 until the month of October 1992, Cordial, using his own money, was able to buy 50,540 pieces of
rattan poles at a cost of about P164, 000.00. Cordial then shipped 50,540 pieces of rattan poles to Manila, loaded in ‘M/V Mana,’
Immediately after the vessel ‘M/V Mana’ docked in Malabon, Cordial personally notified David Miranda of the arrival of the rattan poles,
with Miranda promising that a truck would follow to load the unloaded rattan poles form the vessel. True enough, a truck was sent to carry
the rattan poles to Angeles City and had to make seven trips to haul the shipped rattan poles. On the last strip, Cordial went with the truck
and the rattan poles were allegedly personally received by David Miranda in his Angeles City residence.

A letter of demand for payment of P375,000.00, representing cost of the rattan poles delivered was sent by petitioner thru counsel. In a
reply, Miranda stressed that there exist no privity of contract between Miranda and Cordial. Petitioner filed a complaint against respondent
Miranda before the RTC. In his Answer, respondent maintained that he had no direct or indirect dealings with petitioner. He further
claimed that the document, which had been annexed to the Complaint, was a mere scrap of paper because it did not bear any signature or
any mention of petitioner’s name. Although respondent admitted that he used to buy rattan products from Roberto Savilla, the former
denied knowledge of, much less participation in, any arrangement or agreement between the latter and petitioner.

The RTC rendered its decision in favour of petitioner declaring the verbal, consensual agreement to deliver rattan poles between petitioner
and respondent David Miranda as valid and enforceable. On appeal, the CA reversed the decision of the RTC holding that there was no
written memorandum of the alleged contract between the parties. Petitioner contends that there was a contract between him and
respondent, under which the former allegedly agreed to supply rattan poles to the latter at the stipulated price. The CA and Respondent
Miranda stress the absence of a "written memorandum of the alleged contract between the parties."

Issue:
WON there exists a partnership between Cordial and Miranda.

Held:
NO. As earlier noted, the CA had rules that petitioner was a mere agent or partner of Savilla, with whom respondent had admittedly
contracted. It relied on two pieces of documentary evidence: (1) the Scale Report, indicating the weight of the rattan delivered and bearing
the name "B. Savilla" and not that of petitioners; and (2) the cash vouchers reflecting several cash advances that had allegedly been made
by Savilla, not petitioner, before the rattan was delivered on November 3, 1992. Allegedly, Savilla’s cash advances offset the rattan
delivered to respondent.

These documents, however, do not prove the existence of a partnership 11 or an agency. First, it should be stressed that the bulk of the
alleged cash advances had been obtained by Savilla even before petitioner and respondent met for the first time in April 1992. The cash
advances, therefore, were personal to Savilla and should not be charged to petitioner.

Second, that the Scale Report bears the name "B. Savilla," not that of petitioner, does not necessarily support the cause of respondent. He
did not controvert the claim of petitioner that on November 3, 1992, the latter had indeed delivered rattan poles to the former’s house in
Angeles City. He merely testified that petitioner had delivered the poles in the latter’s alleged capacity as Savilla’s partner or agent. But
such contention amounts only to a general denial, because respondent did not set forth the substance of the matters which he had relied
upon to support his denial. 13 At the very least, to prove his allegations, he should have presented Savilla as his witness or filed a third-party
claim against the latter. Allegations, after all, are not proofs.

The other bases of the CA’s ruling are mere conjectures and surmises. That petitioner went to the residence of Savilla when no payment
was made does not at all prove that the former was an agent or a partner of the latter. That Savilla accompanied petitioner to Palawan
where the latter was to get the rattan poles does not support respondent’s thesis. Indeed, that Savilla did so is consistent with the assertion
of petitioner that the former, who had been in the trade for a longer period, agreed to help him secure the required permits.

G.R. No. 135813            October 25, 2001

 FERNANDO SANTOS, petitioner, vs. SPOUSES ARSENIO and NIEVES REYES, respondents.

Facts:
Sometime in June, 1986, petitioner Fernando Santos and respondent Nieves Reyes were introduced to each other by one
Meliton Zabat regarding a lending business venture proposed by Nieves. It was verbally agreed that Santos act as financier
while Nieves and Zabat would take charge of solicitation of members and collection of loan payments. The venture was then
launched with the understanding that Santos would receive 70% of the profits while Nieves and Zabat would earn 15% each.

In July, 1986, Nieves introduced Cesar Gragera to Santos. Gragera, as chairman of the Monte Maria Development Corporation
(Monte Maria, for brevity), sought short-term loans for members of the corporation. Santos and Gragera executed an
agreement providing funds for Monte Maria's members. Nieves kept the books as representative of Santos while Arsenio,
husband of Nieves, acted as credit investigator.

On August 6, 1986, Santos, Nieves and Zabat executed the 'Article of Agreement' which formalized their earlier verbal
arrangement. The Article of Agreement contains the respective duties of each.Santos and Nieves later discovered that their
partner Zabat engaged in the same lending business in competition with their partnership. Zabat was thereby expelled from
the partnership. The operations with Monte Maria continued.

On June 5, 1987, Santos filed a complaint for recovery of sum of money and damages alleging misappropriatation of the
spouses Arsenio and Nieves as employees his employees.

In their answer, respondents asserted that they were partners and not mere employees of Santos. The complaint, they
alleged, was filed to preempt and prevent them from claiming their rightful share to the profits of the partnership. Arsenio
alleged that he was enticed by Santos to take the place of Zabat after Santos learned of Zabat's activities. Arsenio resigned
from his job at the Asian Development Bank to join the partnership. Nieves claimed that she participated in the business as a
partner, as the lending activity with Monte Maria originated from her initiative.

Petitioner on the other hand insisted that respondent were his mere employees and not partners with respect to the
agreement with Gragera. He claimed that after he discovered Zabat's activities, he ceased infusing funds, thereby causing the
extinguishment of the partnership. The agreement with Gragera was a distinct partnership from that of respondent and
Zabat. Petitioner asserted that respondents were hired as salaried employees with respect to the partnership between
petitioner and Gragera.

Issue:
WON respondents Arsenio and Nieves were employees or partners of Santos and whether respondents were entitled to their
counterclaim for share in the profits.

Held:
The SC said that respondent were not employees but were partners in the partnership. By the contract of partnership, two or
more persons bind themselves to contribute money, property or industry to a common fund, with the intention of dividing
the profits among themselves.12 The "Articles of Agreement" stipulated that the signatories shall share the profits of the
business in a 70-15-15 manner, with petitioner getting the lion's share. This stipulation clearly proved the establishment of a
partnership.

Nieves was not merely petitioner's employee. She discharged her bookkeeping duties in accordance with paragraphs 2 and 3
of the Agreement, which states as follows:

"2. That the SECOND PARTY and THIRD PARTY shall handle the solicitation and screening of prospective borrowers,
and shall x x x each be responsible in handling the collection of the loan payments of the borrowers that they each
solicited.

"3. That the bookkeeping and daily balancing of account of the business operation shall be handled by the SECOND
PARTY."
The "Second Party" named in the Agreement was none other than Nieves Reyes. On the other hand, Arsenio's duties as credit
investigator are subsumed under the phrase "screening of prospective borrowers." Because of this Agreement and the
disbursement of monthly "allowances" and "profit shares" or "dividends" to Arsenio, we uphold the factual finding of both
courts that he replaced Zabat in the partnership.

Indeed, the partnership was established to engage in a money-lending business, despite the fact that it was formalized only
after the Memorandum of Agreement had been signed by petitioner and Gragera.

For the purpose of determining the profit that should go to an industrial partner (who shares in the profits but is not liable for
the losses), the gross income from all the transactions carried on by the firm must be added together, and from this sum
must be subtracted the expenses or the losses sustained in the business. Only in the difference representing the net profits
does the industrial partner share. But if, on the contrary, the losses exceed the income, the industrial partner does not share
in the losses.
 G.R. No. 97212 June 30, 1993

BENJAMIN YU, petitioner, vs. NLRC, respondents.

Facts:
Petitioner Yu was hired by virtue of a Partnership Resolution as Assistant General Manager of the marble
quarrying and export business "Jade Mountain Products Company Limited," in 1985 with a monthly salary of
P4,000. The partnership was originally organized on 28 June 1984 with Lea Bendal and Rhodora Bendal as general
partners and Chin Shian Jeng, Chen Ho-Fu and Yu Chang, all citizens of the Republic of China (Taiwan), as limited
partners. According to petitioner Yu, however, he actually received only half of his stipulated monthly salary, since
he had accepted the promise of the partners that the balance would be paid when the firm shall have secured
additional operating funds from abroad.

Sometime in 1988, the general partners Lea Bendal and Rhodora Bendal and Mr. Yu Chang, a limited partner, sold
and transferred their interests in the partnership to private respondent Willy Co and to one Emmanuel Zapanta.
The partnership now constituted solely by Willy Co and Emmanuel Zapanta continued to use the old firm name of
Jade Mountain. All the employees of the partnership continued working in the business, except to petitioner.
When petitioner reported to the new office of Jade Mountain in Mandaluyong, he was informed by Willy Co that
the latter had bought the business from the original partners and that it was for him to decide whether or not he
was responsible for the obligations of the old partnership, including petitioner's unpaid salaries. Petitioner was
not allowed to work anymore in the Jade Mountain business enterprise and his unpaid salaries remained unpaid.

Petitioner filed a complaint for illegal dismissal and recovery of unpaid salaries. The partnership and Willy Co
denied petitioner's charges, contending in the main that Benjamin Yu was never hired as an employee by the
present or new partnership. The Labor Arbiter rendered a decision in favour of the petitione. On appeal, however,
the NLRC reversed the decision of the Labor Arbiter holding that there was no law requiring the new partnership
to absorb the employees of the old partnership. On appeal before SC, petitioner contended that the NLRC has
overlooked the principle that a partnership has a juridical personality separate and distinct from that of each of its
members. Such independent legal personality subsists, petitioner claims, notwithstanding changes in the
identities of the partners.

Issue:
WON the obligations of the old partnership was acquired by the new partnership.

Held:
Under Art. 1828 off the Civil Code, the dissolution of a partnership is the change in the relation of the partners
caused by any partner ceasing to be associated in the carrying on as distinguished from the winding up of the
business. The legal effect of the changes in the membership of the partnership was the dissolution of the old
partnership which had hired petitioner in 1984 and the emergence of a new firm composed of Willy Co and
Emmanuel Zapanta in 1987.

Article 1830 of the same Code must also be noted that dissolution is caused:

(1) without violation of the agreement between the partners;

xxx xxx xxx
(b) by the express will of any partner, who must act in good faith, when no definite term or
particular undertaking is specified;
xxx xxx xxx
(2) in contravention of the agreement between the partners, where the circumstances do not permit a
dissolution under any other provision of this article, by the express will of any partner at any time;
In the case at bar, just about all of the partners had sold their partnership interests (amounting to 82% of the total
partnership interest) to Mr. Willy Co and Emmanuel Zapanta. The record does not show what happened to the
remaining 18% of the original partnership interest. The acquisition of 82% of the partnership interest by new
partners, coupled with the retirement or withdrawal of the partners who had originally owned such 82% interest,
was enough to constitute a new partnership. The occurrence of events which precipitate the legal consequence of
dissolution of a partnership do not, however, automatically result in the termination of the legal personality of the
old partnership. Article 1829 of the Civil Code states that on dissolution the partnership is not terminated, but
continues until the winding up of partnership affairs is completed.

In the ordinary course of events, the legal personality of the expiring partnership persists for the limited purpose
of winding up and closing of the affairs of the partnership. In the case at bar, it is important to underscore the fact
that the business of the old partnership was simply continued by the new partners, without the old partnership
undergoing the procedures relating to dissolution and winding up of its business affairs. In other words, the new
partnership simply took over the business enterprise owned by the preceeding partnership, and continued using
the old name of Jade Mountain Products Company Limited, without winding up the business affairs of the old
partnership, paying off its debts, liquidating and distributing its net assets, and then re-assembling the said assets
or most of them and opening a new business enterprise.

What is important for present purposes is that, under the above described situation, not only the retiring partners
(Rhodora Bendal, et al.) but also the new partnership itself which continued the business of the old, dissolved, one,
are liable for the debts of the preceding partnership. Under Article 1840 above, creditors of the old Jade
Mountain are also creditors of the new Jade Mountain which continued the business of the old one without
liquidation of the partnership affairs. Indeed, a creditor of the old Jade Mountain, like petitioner Benjamin Yu in
respect of his claim for unpaid wages, is entitled to priority vis-a-vis any claim of any retired or previous partner
insofar as such retired partner's interest in the dissolved partnership is concerned. It is, however, clear to the
Court that under Article 1840 above, Benjamin Yu is entitled to enforce his claim for unpaid salaries, as well as
other claims relating to his employment with the previous partnership, against the new Jade Mountain.
 G.R. No. 148187             April 16, 2008

PHILEX MINING CORPORATION, petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE, respondent.

Facts:
Petitioner Philex Mining Corporation entered into an agreement 4 with Baguio Gold Mining Company for the former to
manage and operate the latter’s mining claim, known as the Sto. Nino mine, located in Atok and Tublay, Benguet Province.
The parties’ agreement was denominated as "Power of Attorney" and provided for the following terms:

4. Within three (3) years from date thereof, the PRINCIPAL (Baguio Gold) shall make available to the MANAGERS
(Philex Mining) up to ELEVEN MILLION PESOS (P11,000,000.00), in such amounts as from time to time may be
required by the MANAGERS within the said 3-year period, for use in the MANAGEMENT of the STO. NINO MINE. The
said ELEVEN MILLION PESOS (P11,000,000.00) shall be deemed, for internal audit purposes, as the owner’s account
in the Sto. Nino PROJECT. Any part of any income of the PRINCIPAL from the STO. NINO MINE, which is left with the
Sto. Nino PROJECT, shall be added to such owner’s account.

5. Whenever the MANAGERS shall deem it necessary and convenient in connection with the MANAGEMENT of the
STO. NINO MINE, they may transfer their own funds or property to the Sto. Nino PROJECT xxxx,

In the course of managing and operating the project, Philex Mining made advances of cash and property in accordance with
paragraph 5 of the agreement. However, the mine suffered continuing losses over the years which resulted to petitioner’s
withdrawal as manager of the mine and in the eventual cessation of mine operations. 6 In its 1982 annual income tax return,
petitioner deducted from its gross income the amount of P112,136,000.00 as "loss on settlement of receivables from Baguio
Gold against reserves and allowances." 9 However, the Bureau of Internal Revenue (BIR) disallowed the amount as deduction
for bad debt and assessed petitioner a deficiency income tax of P62,811,161.39. Petitioner protested before the BIR arguing
that the deduction must be allowed since all requisites for a bad debt deduction were satisfied. Petitioner emphasized that
the debt arose out of a valid management contract it entered into with Baguio Gold. The BIR denied petitioner’s protest for
lack of legal and factual basis.

On appeal before the CTA, the CTA rejected petitioner’s assertion that the advances it made for the Sto. Nino mine were in
the nature of a loan. It instead characterized the advances as petitioner’s investment in a partnership with Baguio Gold for
the development and exploitation of the Sto. Nino mine. The CTA held that the "Power of Attorney" executed by petitioner
and Baguio Gold was actually a partnership agreement. Since the advanced amount partook of the nature of an investment,
it could not be deducted as a bad debt from petitioner’s gross income.

Issue:
WON the “Power of Attorney” partakes the nature of a partnership agreement.

Held:
Yes. An examination of the "Power of Attorney" reveals that a partnership or joint venture was indeed intended by the
parties. Under a contract of partnership, two or more persons bind themselves to contribute money, property, or industry to
a common fund, with the intention of dividing the profits among themselves. While a corporation, like petitioner, cannot
generally enter into a contract of partnership unless authorized by law or its charter, it has been held that it may enter into a
joint venture which is akin to a particular partnership:

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. x x x It is in fact hardly
distinguishable from the partnership, since their elements are similar – community of interest in the business,
sharing of profits and losses, and a mutual right of control. x x x 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. x x x
This observation is not entirely accurate in this jurisdiction, since under the Civil Code, a partnership may be
particular or universal, and a particular partnership may have for its object a specific undertaking. x x x It would
seem therefore that under Philippine law, a joint venture is a form of partnership and should be governed by the law
 of partnerships. The Supreme Court has however recognized a distinction between these two business forms, and
has held that although a corporation cannot enter into a partnership contract, it may however engage in a joint
venture with others. x x x (Citations omitted) 16

Perusal of the agreement denominated as the "Power of Attorney" indicates that the parties had intended to create a
partnership and establish a common fund for the purpose. They also had a joint interest in the profits of the business as
shown by a 50-50 sharing in the income of the mine.

Under the "Power of Attorney", petitioner and Baguio Gold undertook to contribute money, property and industry to the
common fund known as the Sto. Niño mine.17 In this regard, we note that there is a substantive equivalence in the respective
contributions of the parties to the development and operation of the mine. Pursuant to paragraphs 4 and 5 of the agreement,
petitioner and Baguio Gold were to contribute equally to the joint venture assets under their respective accounts. Baguio
Gold would contribute P11M under its owner’s account plus any of its income that is left in the project, in addition to its
actual mining claim. Meanwhile, petitioner’s contribution would consist of its expertise in the management and operation of
mines, as well as the manager’s account which is comprised of P11M in funds and property and petitioner’s "compensation"
as manager that cannot be paid in cash.

However, petitioner asserts that it could not have entered into a partnership agreement with Baguio Gold because it did not
"bind" itself to contribute money or property to the project; that under paragraph 5 of the agreement, it was only optional
for petitioner to transfer funds or property to the Sto. Niño project "(w)henever the MANAGERS shall deem it necessary and
convenient in connection with the MANAGEMENT of the STO. NIÑO MINE." 18

The wording of the parties’ agreement as to petitioner’s contribution to the common fund does not detract from the fact that
petitioner transferred its funds and property to the project as specified in paragraph 5, thus rendering effective the other
stipulations of the contract, particularly paragraph 5(c) which prohibits petitioner from withdrawing the advances until
termination of the parties’ business relations. As can be seen, petitioner became bound by its contributions once the
transfers were made. The contributions acquired an obligatory nature as soon as petitioner had chosen to exercise its option
under paragraph 5.
 G.R. No. 167379             June 27, 2006

PRIMELINK PROPERTIES AND DEVELOPMENT CORPORATION and RAFAELITO W. LOPEZ, Petitioners,

vs.
MA. CLARITA T. LAZATIN-MAGAT, JOSE SERAFIN T. LAZATIN, JAIME TEODORO T. LAZATIN and JOSE MARCOS T. LAZATIN,
Respondents.

Facts:
Primelink Properties and Development Corporation (Primelink for brevity) is a domestic corporation engaged in real estate
development. Rafaelito W. Lopez is its President and Chief Executive Officer. The LAZATINS are co-owners of two (2) adjoining
parcels of land, with a combined area of 30,000 square meters, located in Tagaytay City and covered by Transfer Certificate of
Title. The Lazatins and Primelink, represented by Lopez, in his capacity as President, entered into a Joint Venture Agreement 5
(JVA) for the development of the aforementioned property into a residential subdivision to be known as "Tagaytay Garden
Villas." Under the JVA, the Lazatin siblings obliged themselves to contribute the two parcels of land as their share in the joint
venture. For its part, Primelink undertook to contribute money, labor, personnel, machineries, equipment, contractor’s pool,
marketing activities, managerial expertise and other needed resources to develop the property and construct therein the
units for sale to the public. The Lazatins and Primelink covenanted that they shall be entitled to draw allowances/advances
and also agreed to share in the profits from the joint venture.

The Lazatins agreed to subject the title over the subject property to an escrow agreement. Conformably with the escrow
agreement, the owner’s duplicate of the title was deposited with the China Banking Corporation. However, Primelink failed to
immediately secure a Development Permit from Tagaytay City. On October 12, 1995, the City issued a Development Permit to
Primelink. In a Letter, the Lazatins, through counsel, demanded that Primelink comply with its obligations under the JVA,
otherwise the appropriate action would be filed against it to protect their rights and interests. This impelled the officers of
Primelink to meet with the Lazatins and enabled the latter to review its business records/papers. In another Letter dated
October 22, 1997, the Lazatins informed Primelink that they had decided to rescind the JVA effective upon its receipt of the
said letter. The Lazatins demanded that Primelink cease and desist from further developing the property. Subsequently, on
January 19, 1998, the Lazatins filed, with the RTC a complaint for rescission accounting and damages, with prayer for
temporary restraining order and/or preliminary injunction against Primelink and Lopez. The RTC ordered the rescission of the
JVA. On the other hand, the CA ruled that although respondents did not specifically pray for their takeover of the property
and for the possession of the improvements on the parcels of land, nevertheless, respondents were entitled to said relief as a
necessary consequence of the ruling of the trial court ordering the rescission of the JVA.

Issue:
WON respondents can rescind the JVA.

Held:
YES. With the rescission of the JVA on account of petitioners’ fraudulent acts, all authority of any partner to act for the
partnership is terminated except so far as may be necessary to wind up the partnership affairs or to complete transactions
begun but not yet finished. On dissolution, the partnership is not terminated but continues until the winding up of
partnership affairs is completed. Winding up means the administration of the assets of the partnership for the purpose of
terminating the business and discharging the obligations of the partnership. The transfer of the possession of the parcels of
land and the improvements thereon to respondents was only for a specific purpose: the winding up of partnership affairs,
and the partition and distribution of the net partnership assets as provided by law. After all, Article 1836 of the New Civil
Code provides that unless otherwise agreed by the parties in their JVA, respondents have the right to wind up the partnership
affairs.

It must be stressed, too, that although respondents acquired possession of the lands and the improvements thereon, the said
lands and improvements remained partnership property, subject to the rights and obligations of the parties, inter se, of the
creditors and of third parties under Articles 1837 and 1838 of the New Civil Code, and subject to the outcome of the
settlement of the accounts between the parties as provided in Article 1839 of the New Civil Code, absent any agreement of
the parties in their JVA to the contrary. Until the partnership accounts are determined, it cannot be ascertained how much
any of the parties is entitled to, if at all. It was thus premature for petitioner Primelink to be demanding that it be indemnified
for the value of the improvements on the parcels of land owned by the joint venture/partnership. Notably, the JVA of the
parties does not contain any provision designating any party to wind up the affairs of the partnership.
 G.R. No. 143340       August 15, 2001

LILIBETH SUNGA-CHAN and CECILIA SUNGA, petitioners,

vs.
LAMBERTO T. CHUA, respondent.

Facts:
Respondent Chua verbally entered into a partnership with Jacinto L. Sunga (deceased) in the distribution of Shellane
Liquefied Petroleum Gas (LPG) in Manila. For business convenience, respondent and Jacinto allegedly agreed to register the
business name of their partnership, SHELLITE GAS APPLIANCE CENTER, under the name of Jacinto as a sole proprietorship.
Respondent allegedly delivered his initial capital contribution of P100,000.00 to Jacinto while the latter in turn produced
P100,000.00 as his counterpart contribution, with the intention that the profits would be equally divided between them. The
partnership allegedly had Jacinto as manager, assisted by Josephine Sy, a sister of the wife respondent, Erlinda Sy. As
compensation, Jacinto would receive a manager's fee or remuneration of 10% of the gross profit and Josephine would receive
10% of the net profits, in addition to her wages and other remuneration from the business.

Upon Jacinto's death in the later part of 1989, his surviving wife, petitioner Cecilia and particularly his daughter, petitioner
Lilibeth, took over the operations, control, custody, disposition and management of Shellite without respondent's consent.
Despite respondent's repeated demands upon petitioners for accounting, inventory, appraisal, winding up and restitution of
his net shares in the partnership, petitioners failed to comply. Petitioner Lilibeth allegedly continued the operations of
Shellite, converting to her own use and advantage its properties.

Respondent claimed that after petitioner Lilibeth ran out the alibis and reasons to evade respondent's demands, she
disbursed out of the partnership funds the amount of P200,000.00 and partially paid the same to respondent. Petitioner
Lilibeth allegedly informed respondent that the P200,000.00 represented partial payment of the latter's share in the
partnership, with a promise that the former would make the complete inventory and winding up of the properties of the
business establishment. Despite such commitment, petitioners allegedly failed to comply with their duty to account, and
continued to benefit from the assets and income of Shellite to the damage and prejudice of respondent.

Issue:
WON respondent’ claim is barred by laches or prescription.

Held:
NO. The SC held that the action for accounting filed by respondents three (3) years after Jacinto's death was well within the
prescribed period. The Civil Code provides that an action to enforce an oral contract prescribes in six (6) years while the right
to demand an accounting for a partner's interest as against the person continuing the business accrues at the date of
dissolution, in the absence of any contrary agreement.21 Considering that the death of a partner results in the dissolution of
the partnership22, in this case, it was Jacinto's death that respondent as the surviving partner had the right to an account of
his interest as against petitioners. It bears stressing that while Jacinto's death dissolved the partnership, the dissolution did
not immediately terminate the partnership. The Civil Code 23 expressly provides that upon dissolution, the partnership
continues and its legal personality is retained until the complete winding up of its business, culminating in its termination.
Article 1772 of the Civil Code requires that partnerships with a capital of P3,000.00 or more must register with the SEC,
however, this registration requirement is not mandatory. Article 1768 of the Civil Code 25 explicitly provides that the
partnership retains its juridical personality even if it fails to register. The failure to register the contract of partnership does
not invalidate the same as among the partners, so long as the contract has the essential requisites, because the main purpose
of registration is to give notice to third parties, and it can be assumed that the members themselves knew of the contents of
their contract.26 In the case at bar, non-compliance with this directory provision of the law will not invalidate the partnership
considering that the totality of the evidence proves that respondent and Jacinto indeed forged the partnership in question.

****************************************
Dead Man's Statute" provides that if one party to the alleged transaction is precluded from testifying by death, insanity, or
other mental disabilities, the surviving party is not entitled to the undue advantage of giving his own uncontradicted and
unexplained account of the transaction.9

G.R. No. 144214             July 14, 2003

 LUZVIMINDA J. VILLAREAL, DIOGENES VILLAREAL and CARMELITO JOSE, petitioners,
vs.
DONALDO EFREN C. RAMIREZ and Spouses CESAR G. RAMIREZ JR. and CARMELITA C. RAMIREZ, respondents.

Facts:
Luzviminda J. Villareal, Carmelito Jose and Jesus Jose formed a partnership with a capital of P750,000 for the operation of a
restaurant and catering business under the name "Aquarius Food House and Catering Services." 5 Villareal was appointed
general manager and Carmelito Jose, operations manager. Respondent Donaldo Efren C. Ramirez joined as a partner in the
business on September 5, 1984. His capital contribution of P250,000 was paid by his parents, Respondents Cesar and
Carmelita Ramirez. After Jesus Jose withdrew from the partnership in January 1987, his capital contribution of P250,000 was
refunded to him in cash by agreement of the partners.

In the same month, without prior knowledge of respondents, petitioners closed down the restaurant, allegedly because of
increased rental. The restaurant furniture and equipment were deposited in the respondents' house for storage. 8 Respondent
spouses wrote petitioners, saying that they were no longer interested in continuing their partnership or in reopening the
restaurant, and that they were accepting the latter's offer to return their capital contribution. 9 Carmelita Ramirez wrote
another letter informing petitioners of the deterioration of the restaurant furniture and equipment stored in their house. She
also reiterated the request for the return of their one-third share in the equity of the partnership. The repeated oral and
written requests were, however, left unheeded.

Respondents filed a complaint before the RTC for the collection of a sum of money from petitioners. Petitioners contended
that respondents had expressed a desire to withdraw from the partnership and had called for its dissolution under Articles
1830 and 1831 of the Civil Code and that the latter had no right to demand a return of their equity because their share,
together with the rest of the capital of the partnership, had been spent as a result of irreversible business losses. In their
Reply, respondents alleged that they did not know of any loan encumbrance on the restaurant. According to them, if such
allegation were true, then the loans incurred by petitioners should be regarded as purely personal and, as such, not
chargeable to the partnership. The former further averred that they had not received any regular report or accounting from
the latter, who had solely managed the business. Respondents also alleged that they expected the equipment and the
furniture stored in their house to be removed by petitioners as soon as the latter found a better location for the restaurant.

After trial, the RTC ruled that the parties had voluntarily entered into a partnership, which could be dissolved at any time.
Petitioners clearly intended to dissolve it when they stopped operating the restaurant. The CA held that, although
respondents had no right to demand the return of their capital contribution, the partnership was nonetheless dissolved when
petitioners lost interest in continuing the restaurant business with them.

Issue:
WON the petitioners are liable to the respondents share in the partnership.

Held:
NO. The Court held that the respondents have no right to demand from petitioners the return of their equity share. Except as
managers of the partnership, petitioners did not personally hold its equity or assets. "The partnership has a juridical
personality separate and distinct from that of each of the partners." 23 Since the capital was contributed to the partnership,
not to petitioners, it is the partnership that must refund the equity of the retiring partners. 24

Since it is the partnership, as a separate and distinct entity, that must refund the shares of the partners, the amount to be
refunded is necessarily limited to its total resources. In other words, it can only pay out what it has in its coffers, which
consists of all its assets. However, before the partners can be paid their shares, the creditors of the partnership must first be
compensated.25 After all the creditors have been paid, whatever is left of the partnership assets becomes available for the
payment of the partners' shares.