Case Digest for July 17, 2021

1. Lyons v. Rosenstock, 56 Phil 632 (1932)- Moraña

2. Tuason v. Bolanos 95 Phil 106 (1954)- Garilva
3. Catalan v. Gatchalian, 105 Phil. 1270 (1959) - FREE
FACTS: Catalan and Gatchalian are partners. They mortgaged two lots to Dr.
Marave together with the improvements thereon to secure a credit from the
latter. The partnership failed to pay the obligation. The properties were sold to
Dr. Marave at a public auction. Catalan redeemed the property and he contends
that title should be cancelled and a new one must be issued in his name.
ISSUE: Did Catalan’s redemption of the properties make him the absolute
owner of the lands?
HELD: No. Under Article 1807 of the NCC every partner becomes a trustee for
his copartner with regard to any benefits or profits derived from his act as a
partner. Consequently, when Catalan redeemed the properties in question, he
became a trustee and held the same in trust for his copartner Gatchalian,
subject to his right to demand from the latter his contribution to the amount of
redemption.
4. Litton v. Hil & Ceron, 67 Phil. 509 (1935)- Caspe
5. Goquiolay v. Sycip, 108 Phil. 947 (1960)- FREE
https://www.scribd.com/document/359759039/Goquiolay-v-Sycip

6. Muñasque v. Court of Appeals, 139 SCRA 533 (1985)-Catacutan

7. Liwanag v. Court of Appeals, 281 SCRA 225 (1997)-Cinco
8. Clemente v. Galvan, 67 Phil. 565 (1939)- FREE
https://www.scribd.com/doc/233502412/Article-1810-1814-Partnership-
DIGEST

https://docuri.com/download/partnership_59c1dad3f581710b28680fd9_pdf
 9. Moran, Jr. CA, 133 SCRA 88 (1984)- Dableo
https://www.scribd.com/doc/104697307/Moran-Jr-v-CA
This is a petition for review on certiorari of the decision of the respondent Court
of Appeals which ordered petitioner Isabelo Moran, Jr. to pay damages to
respondent Mariano E, Pecson.
FACTS:
Moran Jr. and Pecson entered into a partnership agreement for the
distribution of colored posters of the Constitutional Commission wherein
each would contribute P15,000.00 as capital, and that Moran Jr. will print
colored posters in the amount of 95,000. Moreover, Pecson will receive a
commission of P1,000 a month starting April 15, 1971, up to December 15,
1971 (8 months). Ultimately, Pecson contributed only P10,000.00 of the
P15,000.00 promised, with Moran Jr. failing to contribute any amount at all and
only printing 2,000 copies of the 95,000.

After the liquidation of accounts, Pecson filed for an action to recover the
payment of his share in the profits that the partnership would have earned
and payment of unpaid commission. The trial court granted each party the right
to rescind the contracts since bothfailed to fulfill their respective promises. The CA
awarded P47,500.00 to Pecson for his share in unrealized profits and P8,000.00
commission. Thus, Moran Jr. appealed that the award his highly speculative and
should be avoided and that the award of the commission has no basis in law.

ISSUES:

1. Is the amount of the award for unrealized profits proper?

2. Is the amount of Pecson’s commission proper?

HELD:
1. No. The Court held that while Pecson does indeed deserve an award for unrealized
profits, the Court agreed that the amount is highly speculative. In applying Art. 1786
and Art. 2200, the Court held that an assessment should be made on how profitable
the business venture would be. In the case at hand, there is no evidence that the
partnership would have been a profitable venture – as in fact it was
considered “doomed from the start”. 

Furthermore, the Court made notice of the fact that: 1) There was a mutual breach of
the agreement since Pecson merely paid P10,000.00 of the P15,000; 2) The
COMELEC failed to proclaim all 320 Constitutional Commission candidates on time and
3) The existence of hidden risks as with any business venture.  

Thus, the Court further applied Art. 1797 and that each partner must share in
the profits and the losses of the venture. Moreover, even with the assurance
made by one of the partners that they would earn a huge amount of profits, in the
absence of fraud, a partner cannot recover highly speculative profits.

Nevertheless, the partnership earned P6,000.00 as net profit should be divided

between Pecson and Moran, Jr. And since opnly P4,000.00 was undesirable
 by the petitioner in printing the 2,000 copies, the remaining P6,000.00
should be returned to Pecson

3. No. The Court held that while the agreement did indeed stipulate a P1, 000.00
commission every month, which would make the P8,000.00 award proper in theory,
the agreement does not state the basis of commission. Thus, the payment of
the commission could only have been predicated on extravagant profits. The
partnership could not have intended the giving of commission despite loss or failure of
the venture. Thus, since the partnership was a failure, Pecson is not entitled to the
said commission.
WHEREFORE, the petition is GRANTED. The decision of the respondent Court of Appeals (now Intermediate
Appellate Court) is hereby SET ASIDE and a new one is rendered ordering the petitioner Isabelo Moran, Jr., to pay
private respondent Mariano Pecson SIX THOUSAND (P6,000.00) PESOS representing the amount of the private
respondent's contribution to the partnership but which remained unused; and THREE THOUSAND (P3,000.00)
PESOS representing one half (1/2) of the net profits gained by the partnership in the sale of the two thousand
(2,000) copies of the posters, with interests at the legal rate on both amounts from the date the complaint was filed
until full payment is made.

10. Sison v. McQuaid, 94 Phil. 201 (1953)- FREE

https://www.scribd.com/document/135566614/Sison-v-Mcquaid-Digest
 Liquidation shall happen before a partner may claim his share of profit from the
partnership.
Facts: Plaintiff brought an action in the CFI against defendant. Defendant
borrowed from him money (P 2,210) to enable her to pay her obligations and to
add to her capital in her lumber business. She could not pay so she proposed to
take plaintiff as a partner in her business, plaintiff to contribute the P 2,210 due
him from defendant. Before the last World War, the partnership sold 230,000‐
board ft. of lumbe rto the US Army for P 13,800.00. Defendant refused to
deliver ½ of it (P 6,900.00) to plaintiff despite his repeated demands. Plaintiff
filed an action to compel defendant to pay him his half of the profit from the
partnership. The case was dismissed upon the ground of prescription.

Issue: Whether or not plaintiff is entitled to the sum he claims

Held:NO. Order of dismissal was affirmed, but on the ground that the complaint
states no cause of action.

Ratio: It is not clear from the complaint just when the cause of action accrued.
Thus the dismissal of the case is erroneous. However order should be retained
on the ground that the complaint has no cause of action. Plaintiff seeks to
recover from defendant one-half of the purchase price of lumber sold by the
partnership to the United States Army. But his complaint does not show why he
should be entitled to the sum he claims. It does not allege that there has been a
liquidation of the partnership business and the said sum has been found to be
due him as his share of the profits. The proceeds from the sale of a certain
amount of lumber cannot be considered profits until costs and expenses have
been deducted. Moreover, the profits of the business cannot be determined by
taking into account the result of one particular transaction instead of all the
transactions had. Hence, the need for a general liquidation before a member of
a partnership may claim a specific sum as his share of the profits.
11. Jackson v. Blum, 1 Phil. 4 (1901)- Dolorosa
12. Martinez v. Ong Pong Co., 14 Phil. 726 (1910)- Garilva
13. Lim Tanhu v. Ramolete, 66 SCRA 425 (1975) - FREE
FACTS:

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

She alleged in her complaint that at the time of death of Tee Hoon Lim Po Chuan, the
defendants, without liquidation, continued the business of glory commercial company,
by purportedly organizing a corporation known as the glory commercial company,
incorporated and sometime in the month of November, 1967, defendants, particularly
Antonio Lim Tan Hu, by means of fraud deceit, and misrepresentations did then and
there , induce and convince her to execute a quitclaim of all her rights and interests,
in the assets of the partnership of glory commercial company.

Thereafter, in the year 1968-69, the defendants who had earlier promised to liquidate
the aforesaid properties and assets in favor, among others of plaintiff and until the
middle of the year 1970 when the plaintiff formally demanded from the defendants
the accounting of real and personal properties of glory commercial company,
defendants refused and stated that they would not give the share of the plaintiff.

ISSUE:

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

RULING:

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

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

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

14. Rojas v. Maglana, 192 SCRA 110 (1990) - Dolorosa

15. Uy v. Puzon, 79SCRA 598 (1977)- Moraña

16. Sancho v. Lizarraga, 55 Phil. 601 (1931) - FREE

FACTS:

The plaintiff brought an action for the rescission of the partnership contract between
himself and the defendant and the reimbursement of his investment worth 50,000php
with interest at 12 per cent per annum form October 15, 1920, with costs, and any
other just and equitable remedy against said defendant. The defendant denies
generally and specifically all the allegations of the complaint and asked for the
dissolution of the partnership, and the payment to him as its manager and
administrator P500 monthly from October 15, 1920 until the final dissolution with
interest.

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

ISSUE:

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

HELD:

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

17. Galvez v. Lo Seng, 42 Phil. 288 (1921)- Panes

18. Halon v. Haussermann, 40 Phil. 796 (1920)- Tandugon

19. Evangelista & Co. v. Abad Santos, 51 SCRA 416 (1973)- FREE
FACTS:
On October 9, 1954, a co-partnership with herein petitioners as capitalist partners
was formed under the name “Evangelista & Co.” The Articles of         Co-partnership
was, however, amended on June 7, 1955 so as to include herein respondent, Estrella
Abad Santos, as an industrial partner.

Consequently, on December 17, 1963, Abad Santos filed suit against the      three (3)
capitalist partners, alleging that the partnership, which was also made a party-
defendant, had been paying dividends to the partners except to her. It was further
alleged that despite her requests that she be allowed to examine partnership books,
to give her information regarding the partnership affairs and to receive her share in
the dividends declared by the partnership, the petitioners refused and continued to
refuse. She therefore prayed that the petitioners be ordered to render an accounting
of the partnership business and to pay her the corresponding share in the dividends.

ISSUE:
Whether or not the Articles of Co-partnership shall be considered as a conclusive
evidence of respondent’s status as a limited partner?

HELD:
NO. The Court held that despite the genuineness of the Articles of                   Co-
partnership the same did not express the true intent and agreement of the parties,
however, as the subsequent events and testimonial evidences indicate otherwise, the
Court upheld that respondent is an industrial partner of the company.

Article 1789 provides that ‘An industrial partner cannot engage in business for
himself, unless the partnership expressly permits him to do so; and if he should do
so, the capitalist partners may either exclude him from the firm or avail themselves of
the benefits which he may have obtained in violation of this provision, with a right to
damages in either case.’ Since 1954 and until after the promulgation of the decision
of the appellate court, Abad Santos has served as a judge of the City Court of Manila
and had been paid for services rendered allegedly contributed by her to the
partnership. Though being a judge of the City Court of Manila cannot be characterized
a business and/or may be considered an antagonistic business to the partnership, the
petitioners, subsequent of petitioners’ answer to the complaint, petitioners reached
the decision that respondent be excluded from and deprived of her alleged share in
the interest or participation as an alleged industrial partner in the net profits or
income of the partnership.

Having always known the respondent is a City Judge even before she joined the
partnership, why did it take petitioners so many years before excluding her from said
company? Furthermore, the act of exclusion is premised on the ground that
respondent has always been a partner, an industrial partner. In addition, the Court
further held that with the consideration of Article 1767 that ‘By 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 profits among themselves’,
the services rendered by respondent may legitimately be considered the respondent’s
contribution to the common fund.