1. TOCAO V.

CA On October 9, 1987, Anay learned that Marjorie

G.R. No. 127405; October 4, 2000 Tocao had signed a letter addressed to the Cubao
Ponente: J. Ynares-Santiago sales office to the effect that she was no longer the
Facts: vice-president of Geminesse Enterprise.

Private respondent Nenita A. Anay met petitioner

William T. Belo, then the vice-president for
operations of Ultra Clean Water Purifier, through
her former employer in Bangkok. Belo introduced
Anay to petitioner Marjorie Tocao, who conveyed
her desire to enter into a joint venture with her for
the importation and local distribution of kitchen
cookwares
Under the joint venture, Belo acted as capitalist,
Tocao as president and general manager, and
Anay as head of the marketing department and
later, vice-president for sales
The parties agreed that Belo's name should not
appear in any documents relating to
transactions with West Bend Company. Anay
having secured the distributorship of cookware
products from the West Bend Company and
organized the administrative staff and the sales
force, the cookware business took off successfully.
They operated under the name of Geminesse
Enterprise, a sole proprietorship registered in
Marjorie Tocao's
Anay attempted to contact Belo. She wrote him
twice to demand her overriding commission for the
period of January 8, 1988 to February 5, 1988 and
the audit of the company to determine her share in
the net profits.
Anay still received her five percent (5%) overriding
commission up to December 1987. The following
year, 1988, she did not receive the same
commission although the company netted a gross
sales of P 13,300,360.00.
On April 5, 1988, Nenita A. Anay filed Civil Case
No. 88-509, a complaint for sum of money with
their damages against Marjorie D. Tocao and William
Belo before the Regional Trial Court of Makati,
Branch 140
The trial court held that there was indeed an "oral
partnership agreement between the plaintiff and
the defendants. The Court of Appeals affirmed the
lower court’s decision.
name. Issue:

 Whether the parties formed a partnership

The parties agreed further that Anay would be
Held:
entitled to: 
(1) ten percent (10%) of the annual net profits of Yes, the parties involved in this case formed a
the business;  partnership
(2) overriding commission of six percent (6%) of
the overall weekly production; 
The Supreme Court held that to be considered a
(3) thirty percent (30%) of the sales she would
juridical personality, a partnership must fulfill these
make; and 
requisites:
(4) two percent (2%) for her demonstration
services. The agreement was not reduced to
writing on the strength of Belo's assurances that he
(1) two or more persons bind themselves to
was sincere, dependable and honest when it came
contribute money, property or industry to a
to financial commitments.
common fund; and

(2) intention on the part of the partners to divide the

profits among themselves. It may be constituted in

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any form; a public instrument is necessary only
where immovable property or real rights are
contributed thereto.  ground that the case was not brought by the real
This implies that since a contract of partnership is
consensual, an oral contract of partnership is as
good as a written one.
In the case at hand, Belo acted as capitalist while
Tocao as president and general manager, and
Anay as head of the marketing department and
later, vice-president for sales. Furthermore, Anay
was entitled to a percentage of the net profits of the
business.
Therefore, the parties formed a partnership.
2. J.M. Tuason & Co, Inc. v. Qurino Bolaños
G.R. No. L-4935, 28 May 1954
Reyes, J.
Doctrine
Though a corporation has no power to enter into a
partnership, it may nevertheless enter into a joint
venture with another where the nature of that
venture is in line with the business authorized by its
charter.
Facts:
Appellee JM Tuason & Co, Inc, represented by its
Managing Partner, Gregorio Araneta, Inc., filed an
action before the Court of First Instance (CFI) to
recover the possession of registered land situated
in Tatalon, Quezon City. In his answer, Appellant
Quirino Bolaños sets up the prescription and title
himself through open, continuous, exclusive, and
public, and notorious possession of the subject
land under claim of ownership. Further, the
registration of the land in dispute was obtained by
the Appellee or its predecessors-in-interest through
fraud or error and without knowledge or interest
either personal or through publication to him or his
predecessors-in-interest. After the trial, the CFI
rendered judgement in favor of the Appellee,
declaring the Appellant to be without any right to
the land in question.
Hence, this Petition whereby the Appellant claimed
that the CFI erred in dismissing the case on the
property-in-interest. He claimed that Gregorio
Aranata, Inc. cannot act as managing partner for
the plaintiff because it is illegal for two corporations
to enter into a partnership.
Issue
Whether or not Gregorio Araneta, Inc. can
represent the Appellee as Managing Partner in the
present case.
Ruling:
The Supreme Court ruled in the affirmative. The
Court ruled that there is nothing to the contention
that the present case is not brought by the real
party-in-interest, who is the Appellee. What the
Rules of Court require is that an action be
brought in the name of, but not necessarily by, the
real party-in-interest. Further, there is nothing
against one corporation being represented by
another person, natural or juridical, in a suit. Well-
settled is the rule that though a corporation has no
power to enter into a partnership, it may
nevertheless enter into a joint venture with another
where the nature of that venture is in line with the
business authorized by its charter. In the present
case, there is no showing that indicated the venture
in which the Appellee is represented by Gregorio
Araneta, Inc as its managing partner is not in line
with the corporate business of either of them.
3. Alfredo N. Aguila, Jr vs. CA G.R. No. 127347.
November 25, 1999
Facts:
Petitioner is the manager of A.C. Aguila & Sons,
Co., a partnership engaged in lending activities.
Private respondent Felicidad Abrogar and her late
husband, Ruben M. Abrogar, were the registered
owners of a house and lot, in Marikina On April 18,
1991, Felicidad Abrogar (with consent of her
husband) and A.C. Aguila & Sons, Co entered into
a Memorandum of Agreement and Deed of
Absolute Sale, as follows:
2

A.C. Aguila & Sons, Co. shall buy the property of
the spouses (house and lot in Marikina) in
consideration of sum of Php 200,000. The deed of
absolute sale is with the option to repurchase with
a period of 90 days for Php 230, 000. Should the
spouses fail to exercise their right to repurchase,
they are obliged to deliver to A.C. Aguila & Sons,
Co. the possession of the property, within 25 days
from expiration of 90 days repurchase period. The
parties likewise executed a deed of absolute sale,
dated June 11, 1991, wherein private respondent,
with the consent of her late husband, sold the
subject property to A.C. Aguila & Sons, Co.,
represented by petitioner, for P200,000. In a
special power of attorney private respondent
authorized petitioner to cause the cancellation of
TCT No. 195101 and the issuance of a new
certificate of title in the name of A.C. Aguila and
Sons, Co., in the event she failed to redeem the
subject property as provided in the Memorandum
of Agreement.
Private respondent failed to redeem the property,
hence, pursuant to the SPA, petitioner caused the
cancellation and the issuance of a new certificate
of title in the name of A.C. Aguila and Sons, Co.
Subsequently, private respondent were demanded
to vacate the premises
MTC Ruling: Upon the refusal of private
respondent to vacate the subject premises, A.C.
Aguila & Sons, Co. filed an ejectment case against
her in the MTC Marikina. Said court ruled in favour
of in favor of A.C. Aguila & Sons, Co. RTC Ruling:
Private respondent then filed a petition for
declaration of nullity of a deed of sale with the
Regional Trial Court, Marikina against Alfredo
Aguila. 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 on June 11,
1991. RTC-Marikina dismissed the petition and
ruled that documents, to wit: the Memorandum of
Agreement, the Special Power of Attorney, and the
Deed of Absolute Sale were all signed by the
parties on the same date on April 18, 1991 (death
of husband 08 May 1991)
CA Ruling: On appeal, CA reversed the decision of
RTC. And ruled that the agreement entered into by
the parties is in the nature of pactum
commissorium. Therefore, the deed of sale should
be declared void as we hereby so declare to be
invalid, for being violative of law. Hence this
petition for review on Certiorari. Petitioner contends
that he is not the real party in interest but A.C.
Aguila & Co., against which this case for nullity of
deed of sale should have been brought.
Issue:
Whether or not the civil case (for nullity of deed of
sale) was filed against the real party in interest.
Held:
NO. As pointed out by Aguila, he is not the real
party in interest but rather it was the partnership
A.C. Aguila & Sons, Co. The Rules of Court
provide that “every action must be prosecuted and
defended in the name of the real party in interest.”
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, as
in the case at bar. Under Art. 1768 of the Civil
Code, a partnership “has a juridical personality
separate and distinct from that of each of the
partners.” The partners cannot be held liable for the
obligations of the partnership unless it is shown
that the legal fiction of a different juridical
personality is being used for fraudulent, unfair, or
illegal purposes. In this case, Felicidad has not
shown that A.C. Aguila & Sons, Co., 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 &
Sons, Co. It is the partnership, not its officers or
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agents, which should be impleaded in any litigation
involving property registered in its name. A
violation of this rule will result in the dismissal of
the complaint.
4. Mariano Pascual and Renato Dragon v. CIR
G.R. No. 78133 10.18.1988
PONENTE: Gancayco
Facts:
Petitioners bought 2 parcels of land from Santiago
Bernardino in1965, sold it to Marenir Devt. Corp in
1968. They also bought 3 parcels of land from Juan
Roque in 1966, sold it to Erlinda Reyes and Maria
Samson on in 1970. They realized a net profit of
60k Php in 1970. The capital gains taxes on the
transactions were paid in 1973 and 1974. Then BIR
Commissioner Plana sent a letter to the petitioners
assessing them a total amount of 107,101.70 Php
as corporate income tax for the year 1968-70.
Petitioners protested this , they assert that they
availed of the tax amnesty of 1974. BIR
Commissioner informed them that they had formed
an unregistered partnership and as such the
transactions are taxable. Petitioners filed a petition
for review with the CTA. CTA ruled in favor of the
Commissioner (ground same as with Evangelista v
CIR, i.e. an unregistered partnership was in fact
formed by petitioners which like a corporation was
subject to corporate income tax distinct from that
imposed on the partners.)
Hence this petition
Issue:
Whether or not they are mere co-owner or is their
relationship an unregistered partnership?
Held:
Yes. Merely co-owners
Ratio:
1. In the present case, 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.
2. In the instant case, petitioners bought two (2)
parcels of land in 1965. They did not sell the same
nor makeany improvements thereon. In 1966, they
bought another three (3) parcels of land from one
seller. Itwas only 1968 when they sold the two (2)
parcels of land after which they did not make any
additional or new purchase. The remaining three
(3) parcels were sold by them in 1970. The
transactions were isolated. The character of
habituality peculiar to business transactions for the
purpose of gain was not present.
3. There is clear evidence of co-ownership
between the petitioners. There is no adequate
basis to support the proposition that they thereby
formed an unregistered partnership. The two
isolated transactions whereby they purchased
properties and sold the same a few years
thereafter did notthereby make them partners.
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. Under the
circumstances, they cannot beconsidered to have
formed an unregistered partnership which is
thereby liable for corporate income tax, as the
respondent commissioner proposes.
4. Even assuming for the sake of argument that
such unregistered partnership appears to have
been formed, 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
5. Oña v. CIR
G.R. No. L-19342 May 25, 1972, J. Barredo
Facts:
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Julia Buñales died leaving as heirs her surviving
spouse, Lorenzo Oña and her five children. A civil
case was instituted for the settlement of her state,
in which Oña was appointed administrator and later
on the guardian of the three heirs who were still
minors when the project for partition was approved.
This shows that the heirs have undivided ½ interest
in 10 parcels of land, 6 houses and money from the
War Damage Commission.
Although the project of partition was approved by
the Court, no attempt was made to divide the
properties and they remained under the
management of Oña 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. Petitioners
returned for income tax purposes their shares in
the net income but they did not actually receive
their shares because this left with Oña who
invested them.
Based on these facts, CIR decided that petitioners
formed an unregistered partnership and therefore,
subject to the corporate income tax, particularly for
years 1955 and 1956. Petitioners asked for
reconsideration, which was denied hence this
petition for review from CTA’s decision.
Issue:   
W/N there was a co-ownership or an unregistered
partnership
W/N the petitioners are liable for the deficiency
corporate income tax
Held:
Unregistered partnership. The Tax Court found that
instead of actually distributing the estate of the
deceased among themselves pursuant to the
project of partition, the heirs allowed their
properties to remain under the management of Oña
and let him use their shares as part of the common
fund for their ventures, even as they paid
corresponding income taxes on their respective
shares.
Yes. For tax purposes, 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 either duly executed in an
extrajudicial settlement or approved by the court in
the corresponding testate or intestate proceeding.
The reason 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.
For purposes of the tax on corporations, our
National Internal Revenue Code includes these
partnerships —
 The term “partnership” includes 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… (8 Merten’s Law of Federal Income Taxation,
p. 562 Note 63; emphasis ours.)
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. Judgment affirmed.
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6. Jose Gatchalian, et al. v. The Collector of organization thereof and the winning of the prize,
Internal Revenue (G.R. No. L-45425) Jose Gatchalian personally appeared in the office
of the Philippines Charity Sweepstakes, in his
April 29, 1939
capacity as co-partner, as such collection the prize,
DOCTRINE:
the office issued the check for P50,000 in favor of
If two or more persons merely formed a community
Jose Gatchalian and company, and the said
of property, the latter is exempt from the payment
partner, in the same capacity, collected the said
of income tax under the law. But if what is
check.
organized and constituted is a partnership of a civil
All these circumstances repel the idea that the
nature, the said entity is bound to pay income tax.
plaintiffs organized and formed a community of
Facts: property only.
Jose Gatchalian, together with 14 others, pooled 2. Having organized and constituted a partnership
money together in order to purchase one of a civil nature, Gatchalian and Company is the
sweepstakes ticket valued at P2. The said ticket one bound to pay the income tax which the CIR
was registered in the name of Jose Gatchalian and collected.
Company. As luck would have it, the ticket won There is also no merit in their contention that the
third prize in the amount of P50,000. tax should be prorated among them and paid
individually, resulting in their exemption from the
Subsequently, Gatchalian was required by the CIR tax.
to pay income tax covering the amount won, which
assessment Gatchalian, et al. paid under protest. 7. Obillos v. CIR G.R. No. L68118 October 29,
Gatchalian, et al. were arguing that they should be 1985
exempt from paying income tax because what they
Facts:
formed was merely a community of property and
not a partnership. The four children of Jose Obillos acquired two lots
from the latter for residential purposes.
The SC affirmed the validity of the CIR
Subsequently, they sold these properties and split
assessment, ruling that what Gatchalian, et al.
the profits amongst them. The CIR imposed
organized was a partnership.
several taxes on top of the income tax already
Issue: given claiming that the four children had formed an
unregistered partnership or joint venture. The court
1. Whether what Gatchalian, et al. instituted was a
held that they did not create a partnership. One
mere community of property. – No, it was a
must look at the intention of the parties in order to
partnership of a civil nature. 
determine whether they indeed created a
2. Whether Gatchalian and Company are exempt
partnership.
from paying income tax. – NO. 

Ruling: Issue:
WON the petioners had indeed formed an
1. According to the facts on record, Gatchalian, et
unregistered partnership, and therefore, liable for
al. organized a partnership of a civil nature
the extra taxes and penalties imposed by the CIR.
because each of them put up money to buy a
NO
sweepstakes ticket for the sole purpose of dividing
equally the prize which they may win, as they did in
Held:
fact in the amount of P50,000.
To regard the petitioners as having formed a
The partnership was not only formed, but upon the
taxable unregistered partnership would result in
6
oppressive taxation and confirm the dictum that the respondent contained in his letter of demand dated
power to tax involves the power to destroy. As September 24, 1954" be reversed, and that they be
testified by Jose Obillos, Jr., they had no such absolved from the payment of the taxes in
intention. They were coowners pure and simple. question. CTA denied their petition and subsequent
The petitioners were not engaged in any joint MR and New Trials were denied. Hence this
venture by reason of that isolated transaction. Their petition.
original purpose was to divide the lots for
Issue:
residential purposes. If later on they found it not
feasible to build their residences on the lots Whether or not petitioners have formed a
because of the high cost of construction, then they partnership and consequently, are subject to the
had no choice but to resell the same to dissolve the tax on corporations provided for in section 24 of
co-ownership. o The division of the profit was Commonwealth Act. No. 466, otherwise known as
merely incidental to the dissolution of the co the National Internal Revenue Code, as well as to
ownership which was in the nature of things a the residence tax for corporations and the real
temporary state Article 1769(3) of the CC provides estate dealers fixed tax.
that: o "the sharing of gross returns does not of
itself establish a partnership, whether or not the Held:

persons sharing them have a joint or common right

YES. The essential elements of a partnership are
or interest in any property from which the returns
two, namely: (a) an agreement to contribute
are derived". There must be an unmistakable
money, property or industry to a common fund;
intention to form a partnership or joint venture.
and (b) intent to divide the profits among the
8. Evangelista vs CIR, G.R. No. L-9996, October contracting parties. The first element is
15, 1957 undoubtedly present in the case at bar, for,
admittedly, petitioners have agreed to, and did,
Facts: contribute money and property to a common fund.
Upon consideration of all the facts and
Petitioners borrowed sum of money from their
circumstances surrounding the case, we are fully
father and together with their own personal funds
satisfied that their purpose was to engage in real
they used said money to buy several real
estate transactions for monetary gain and then
properties. They then appointed their brother
divide the same among themselves, because of the
(Simeon) as manager of the said real properties
following observations, among others: (1) Said
with powers and authority to sell, lease or rent out
common fund was not something they found
said properties to third persons. They realized
already in existence; (2) They invested the same,
rental income from the said properties for the
not merely in one transaction, but in a series of
period 1945-1949.
transactions; (3) The aforesaid lots were not
On September 24, 1954 respondent Collector of devoted to residential purposes, or to other
Internal Revenue demanded the payment of personal uses, of petitioners herein.
income tax on corporations, real estate dealer's
Although, taken singly, they might not suffice to
fixed tax and corporation residence tax for the
establish the intent necessary to constitute a
years 1945-1949. The letter of demand and
partnership, the collective effect of these
corresponding assessments were delivered to
circumstances is such as to leave no room for
petitioners on December 3, 1954, whereupon they
doubt on the existence of said intent in petitioners
instituted the present case in the Court of Tax
herein.
Appeals, with a prayer that "the decision of the

7
For purposes of the tax on corporations, our
National Internal Revenue Code, includes these
partnerships — 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.
9. AFISCO INSURANCE Co. vs CA G.R. No.
112675 January 25, 1999
Facts:
The PET are non-life insurance corporations. The
PET entered into a reinsurance treaties with
Munich. The reinsurance treaties required the PET
to form a pool. On 1976, the pool submitted a
financial statement and filed an information return
of organization exempt from income tax for the
year ending in 1975. On the basis of which, the
CIR assessed the PET with deficiency corporate
taxes, withholding taxes, and dividends paid to
Munich and PET, respectively. These were
protested by the PET. The protest was denied by
CIR and ordered the PET to pay the deficiency.
The CA ruled in the main that the pool of
machinery insurers was a partnership taxable as a
corporation, and that the latter's collection of
premiums on behalf of its members, the ceding
companies, was taxable income. It added that
prescription did not bar the Bureau of Internal
Revenue (BIR) from collecting the taxes due,
because "the taxpayer cannot be located at the
address given in the information return filed.”
Issue:
Whether or not the Clearing House, acting as a
mere agent and performing strictly administrative
functions, and which did not insure or assume any
risk in its own name, was a partnership or
association subject to tax as a corporation.
Ruling:
Yes. Ineludibly, the Philippine legislature included
in the concept of corporations those entities that
resembled them such as unregistered partnerships
and associations. Parenthetically, the NIRC's
inclusion of such entities in the tax on corporations
was made even clearer by the tax Reform Act of
1997. Art. 1767 of the Civil Code recognizes the
creation of a contract of partnership when "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." 25 Its requisites are: "(1) mutual
contribution to a common stock, and (2) a joint
interest in the profits." 26 In other words, a
partnership is formed when persons contract "to
devote to a common purpose either money,
property, or labor with the intention of dividing the
profits between themselves." Meanwhile, an
association implies associates who enter into a
"joint enterprise . . . for the transaction of
business." In this case, the ceding companies
entered into a Pool Agreement or an association
that would handle all the insurance businesses
covered under their quota-share reinsurance treaty
and surplus reinsurance treaty with Munich. The
following unmistakably indicates a partnership or
an association covered by Section 24 of the NIRC:
(1) The pool has a common fund, consisting of
money and other valuables that are deposited in
the name and credit of the pool. This common fund
pays for the administration and operation expenses
of the pool. (2) The pool functions through an
executive board, which resembles the board of
directors of a corporation, composed of one
representative for each of the ceding companies.
(3) True, the pool itself is not a reinsurer and does
not issue any insurance policy; however, its work is
indispensable, beneficial and economically useful
to the business of the ceding companies and
Munich, because without it they would not have
received their premiums. The ceding companies
share "in the business ceded to the pool" and in the
"expenses" according to a "Rules of Distribution"
annexed to the Pool Agreement. Profit motive or
business is, therefore, the primordial reason for the
8
pool's formation.
10. Torres vs CA
G.R. No. 134559   December 9, 1999
Doctrine: The alleged nullity of the partnership will
not prevent courts from considering the Joint
Venture Agreement an ordinary contract from
which the parties’ rights and obligations to each
other may be inferred and enforced
Facts:
Petitioners Torres and Baring entered into a “joint
venture agreement” with Respondent Torres for the
development of a parcel of land into a subdivision.
They executed a Deed of Sale covering the said
parcel of land in favor of respondent Manual
Torres, who then had it registered in his name. By
mortgaging the property, respondent Manuel
Torres obtained from Equitable Bank a loan of
P40,000, which was supposed to be used for the
development of subdivision as per the JVA.
However, the project did not push through and the
land was subsequently foreclosed by the bank.
Petitioners Antonia Torres alleged that it was due
to respondent’s lack of funds/skills that caused the
project to fail, and that respondent use the loan in
the furtherance of his own company. On the
otherhand, respondent Manuel Torres alleged that
he used the loan to implement the JVA – surveying
and subdivision of lots, approval of the project,
advertisement, and construction of roads and the
likes, and that he did all of these for a total of
P85,000.
Petitioners filed a case for estafa against
respondent but failed. They then instituted a civil
case. CA held that the two parties formed a
partnership for the development of subdivision and
as such, they must bear the loss suffered by the
partnership in the same proportion as their share in
profits. Hence, the petition.
Issue:
Whether or not the transaction between petitioner
and respondent was that of joint
venture/partnership.
Held:
Yes. There formed a partnership between the two
on the basis of joint-venture agreement and deed
of sale. A reading of the terms of agreement shows
the existence of partnership pursuant to Art 1767 of
Civil Code, which states “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.” In the agreement,
petitioners would contribute property to the
partnership in the form of land which was to be
developed into a subdivision; while respondent
would give, in addition to his industry, the amount
needed for general expenses and other costs.
Furthermore, the income from the said project
would be divided according to the stipulated
percentage. Clearly, the contract manifested the
intention of the parties to form a partnership.
11. Lim vs. Philippine Fishing Gear Industries
Inc. [GR 136448, 3 November 1999]
Facts: 
Lim Tong Lim requested Peter Yao and Antonio
Chuato engage in commercial fishing with him. The
three agreed to purchase two fishing boats but
since they do not have the money they borrowed
from one Jesus Lim the brother of Lim Tong Lim.
Subsequently, they again borrowed money for the
purchase of fishing nets and other fishing
equipments. Yao and Chua represented
themselves as acting in behalf of “Ocean Quest
Fishing Corporation” (OQFC) and they contracted
with Philippine Fishing Gear Industries (PFGI) for
the purchase of fishing nets amounting to more
than P500k. However, they were unable to pay
PFGI and hence were sued in their own names as
Ocean Quest Fishing Corporation is a non-existent
corporation. Chua admitted his liability while Lim
Tong Lim refused such liability alleging that Chua
9
and Yao acted without his knowledge and consent
in representing themselves as a corporation.
 
Issue:  complaint against Mabato and Mabato & Agad
Whether Lim Tong Lim is liable as a partner
 
Held:  sum of P14,000, as his share in the profits of the
Yes. It is apparent from the factual milieu that the
three decided to engage in a fishing business.
Moreover, their Compromise Agreement had
revealed their intention to pay the loan with the
proceeds of the sale and to divide equally among
them the excess or loss. The boats and equipment
used for their business entails their common fund.
The contribution to such fund need not be cash or
fixed assets; it could be an intangible like credit or
industry. That the parties agreed that any loss or
profit from the sale and operation of the boats
would be divided equally among them also shows
that they had indeed formed a partnership. The
principle of corporation by estoppel cannot apply in
the case as Lim Tong Lim also benefited from the
use of the nets in the boat, which was an asset of
the partnership. Under the law on estoppel, those
acting in behalf of a corporation and those
benefited by it, knowing it to be without valid
existence are held liable as general partners.
Hence, the question as to whether such was legally
formed for unknown reasons is immaterial to the
case.
12. Agad vs Mabato and Agad Co., G.R. No. L-
24193 | June 28, 1968  Moreover, none of the partners contributed either a
Facts:
Alleging that he and defendant Severino Mabato
are — pursuant to a public instrument dated
August 29, 1952, copy of which is attached to the
complaint as Annex “A” — partners in a fishpond
business, to the capital of which Agad contributed
P1,000, with the right to receive 50% of the profits;
that from 1952 up to and including 1956, Mabato
who handled the partnership funds, had yearly
rendered accounts of the operations of the
partnership; and that, despite repeated demands,
Mabato had failed and refused to render accounts
for the years 1957 to 1963, Agad prayed in his
Company, filed on June 9, 1964, that judgment be
rendered sentencing Mabato to pay him (Agad) the
partnership for the period from 1957 to 1963, in
addition to P1,000 as attorney’s fees, and ordering
the dissolution of the partnership, as well as the
winding up of its affairs by a receiver to be
appointed therefor.
In his answer, Mabato admitted the formal
allegations of the complaint and denied the
existence of said partnership, upon the ground that
the contract therefor had not been perfected.
Issue:
Whether or not “immovable property or real rights”
have been contributed to the partnership under
consideration.
Ruling:
Mabato alleged and the lower court held that the
answer should be in the affirmative, because “it is
really inconceivable how a partnership engaged in
the fishpond business could exist without said
fishpond property (being) contributed to the
partnership.” It should be noted, however, that, as
stated in Annex “A” the partnership was
established “to operate a fishpond”, not to “engage
in a fishpond business”.
fishpond or a real right to any fishpond. Their
contributions were limited to the sum of P1,000
each.
Articles 1771 and 1773 of said Code provide:
Art. 1771. A partnership may be constituted in any
form, except where immovable property or real
rights are contributed thereto, in which case a
public instrument shall be necessary.
Art. 1773. A contract of partnership is void,
whenever immovable property is contributed
10
thereto, if inventory of said property is not made,
signed by the parties; and attached to the public
instrument.
The operation of the fishpond mentioned in Annex
“A” was the purpose of the partnership. Neither
said fishpond nor a real right thereto was
contributed to the partnership or became part of the
capital thereof, even if a fishpond or a real right
thereto could become part of its assets.
Wherefore, we find that said Article 1773 of the
Civil Code is not in point and that, the order
appealed from should be, as it is hereby set aside
and the case remanded to the lower court for
further proceedings, with the costs of this instance
against defendant-appellee, Severino Mabato. It is
so ordered.
constituted solely by Willy Co and Emmanuel
Zapanta continued to use the old firm name of
Jade Mountain, though they moved the firm's main
office from Makati to Mandaluyong, Metropolitan
Manila
Petitioner 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 in fact not allowed to work anymore
in the Jade Mountain business enterprise. His
unpaid salaries remained unpaid.
On 21 December 1988, Benjamin Yu filed a
complaint for illegal dismissal and recovery of
unpaid salaries accruing from November 1984 to
October 1988

Issue:
13. YU v. NLRC
Whether the partnership which had hired petitioner
G.R. No. 97212; June 30, 1993
Yu as Assistant General Manager had been
Ponente: J. Feliciano
extinguished and replaced by a new partnership
composed of Willy Co and Emmanuel Zapanta
Facts:
Petitioner Benjamin Yu was formerly the Assistant
Held:
General Manager of the marble quarrying and
Yes, the partnership which hired Yu was
export business operated by a registered
extinguished and replaced by a new partnership.
partnership with the firm name of "Jade Mountain
In the case at bar, just about all of the partners had
Products Company Limited" ("Jade Mountain").
sold their partnership interests (amounting to 82%
The partnership was originally organized on 28
of the total partnership interest) to Mr. Willy Co and
June 1984 with Lea Bendal and Rhodora Bendal
Emmanuel Zapanta. The record does not show
as general partners and Chiu Shian Jeng, Chen
what happened to the remaining 18% of the
Ho-Fu and Yu Chang, all citizens of the Republic of
original partnership interest. The acquisition of 82%
China (Taiwan), as limited partners.
of the partnership interest by new partners, coupled
with the retirement or withdrawal of the partners
Sometime in 1988, without the knowledge of
who had originally owned such 82% interest, was
Benjamin Yu, the general partners Lea Bendal and
enough to constitute a new partnership
Rhodora Bendal sold and transferred their interests
in the partnership to private respondent Willy Co
In the ordinary course of events, the legal
and to one Emmanuel Zapanta. Mr. Yu Chang, a
personality of the expiring partnership persists for
limited partner, also sold and transferred his
the limited purpose of winding up and closing of the
interest in the partnership to Willy Co. Between Mr.
affairs of the partnership.
Emmanuel Zapanta and himself, private
respondent Willy Co acquired the great bulk of the
In other words, the new partnership simply took
partnership interest. The partnership now
11
over the business enterprise owned by the
preceding 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.
The new partnership itself which continued the
business of the old, dissolved, one, are liable for
the debts of the preceding partnership.
14. Rojas vs Maglana, G.R. No. 30616,
December 10, 1990
Facts:
Maglana and Rojas executed their Articles of Co-
Partnership called Eastcoast Development
Enterprises (EDE). It was a partnership with an
indefinite term of existence. Maglana shall manage
the business affairs while Rojas shall be the
logging superintendant and shall manage the
logging operation. They shall share in all profits
and loss equally. Due to difficulties encountered
they decided to avail of the sources of Pahamatong
as industrial partners. They again executed their
Articles of Co-Partnership under EDE. The term is
30 years. After sometime Pamahatong sold his
interest to Maglana and Rojas including equipment
contributed. After withdrawal of Pamahatong,
Maglana and Rojas continued the partnership.
After 3 months, Rojas entered into a management
contract with another logging enterprise. He left
and abandoned the partnership. He even withdrew
his equipment from the partnership and was
transferred to CMS. He never told Maglana that he
will not be able to comply with the promised
contributions and he will not work as logging
superintendent. Maglana then told Rojas that the
latter share will just be 20% of the net profits. Rojas
took funds from the partnership more than his
contribution. Thus, Maglana notified Rojas that he
dissolved the partnership.
Issue:
1.       WON the nature of partnership of Maglana and
Rojas after dissolution of the second partnership is
de facto and at will.
2.       WON the sharing of partnership profits should
be on the basis of contribution or ratio/proportion of
their respective contributions.
Held:
1.       No. Under the circumstances, the relationship of
Rojas and Maglana after the withdrawal of
Pahamotang can neither be considered as a De
Facto Partnership, nor a Partnership At Will, for as
stressed, there is an existing partnership, duly
registered. The dissolution of the second
partnership does not affect the first partnership
which continued to exist. The fact that Maglana
wrote Rojas for the fulfillment of his obligation in
the partnership and Rojas subsequent reply further
stressed that both considered themselves
governed by the articles of the duly registered
partnership. Hence, as there are only two parties
when Maglana notified Rojas that he dissolved the
partnership, it is in effect a notice of withdrawal.
Under Article 1830, par. 2 of the Civil Code, even if
there is a specified term, one partner can cause its
dissolution by expressly withdrawing even before
the expiration of the period, with or without
justifiable cause. Of course, if the cause is not
justified or no cause was given, the withdrawing
partner is liable for damages but in no case can he
be compelled to remain in the firm. With his
withdrawal, the number of members is decreased,
hence, the dissolution. And in whatever way he
may view the situation, the conclusion is inevitable
that Rojas and Maglana shall be guided in the
liquidation of the partnership by the provisions of its
duly registered Articles of Co-Partnership; that is,
all profits and losses of the partnership shall be
divided "share and share alike" between the
partners.
2.        YES. On the basis of the Commissioners'
Report, the corresponding contribution of the
12
partners from 19561961 are as follows: Eufracio
Rojas who should have contributed P158,158.00,
contributed only P18,750.00 while Maglana who
should have contributed P160,984.00, contributed
P267,541.44 (Decision, R.A. p. 976). It is a settled
rule that 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 (Article 1786,
Civil Code) and for interests and damages from the
time he should have complied with his obligation
(Article 1788, Civil Code) (Moran, Jr. v. Court of
Appeals, 133 SCRA 94 [1984]). Being a contract of
partnership, each partner must share in the profits
and losses of the venture. That is the essence of a
partnership.
15. Santos v. Sps. Arsenio and Nieves Reyes
G.R. No. 135813; October 25, 2001
Facts:
Pursuant to a lending business venture proposed
by Nieves Reyes, Zabat introduced Santos and
Nieves to each other. The three then made an
agreement that Santos would act as the financier of
the business, while Nieves acted as bookkeeper
and Zabat as credit investigator, respectively. The
three met Gregera, whom represented Monte
Maria, for a loan of the said corporation with
Gregera receiving commission. After some time,
however, Santos and Nieves found out that Zabat
was conducting his own private dealings another
competing corporation. Thus, Zabat was
terminated as a partner.
Ultimately, Gregera protested for the recovery of
his unpaid commissions. Thus, Santos filed a
complaint for the recovery of a sum of money and
damages against Nieves Reyes and Arsenio Reyes
(who replaced Zabat) for allegedly misappropriating
Gregera’s commission. Nieves contested that she
was a partner of Santos and that she merely
received her share in the profits as proven by the
execution of an agreement with Gregera which
showed that she was a partner with a share in the
profits of the agreement. She also averred that she
was an industrial partner of the partnership with her
contributing her industry.
Santos, nevertheless, maintained that Nieves was
merely an employee and that he merely secured
her services as bookkeeper. His real partnership
was with Gregera.
Issue:
Was there a partnership that existed between
Santos, Nieves, and Zabat?
Held:
Yes. The Court held that there was indeed a
partnership as applying the NCC definition on
partnerships. The Court agreed with Nieves in that
she acted as an industrial partner without which the
business could not have operated. The partnership
indeed existed despite the lack of formalities
regarding their business relationship and
corresponding interests – which were ultimately
and merely formalized as shown by the Articles of
Agreement executed with Gregera defining the
share of profits and corresponding obligations of
each party. Moreover, the termination of Zabat
technically dissolved the first partnership, but the
said partnership is said to have continued in
existence since it had not undergone the proper
procedure relative to dissolution.
16. Moran Jr. v. CA G.R. No. L-59956 October 31,
1984
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
13
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.
14
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.
17. Bastida v. Menzi & Co.
G.R. No. L-354840; March 31,
Facts:
J.M Menzi, together with his family, owns 99% of
the capital stock of Menzi & Co, Inc. together with
two others constituting the board of directors.
Among various businesses, Menzi & Co, Inc. is
also engaged in the fertilizer business, which they
sell along with the other products they offer under
the company.
In preparation of fertilizers, they secured the
services of Francisco Bastida to superintend the
operations of mixing the fertilizers
agreement of giving a a 35% share (from the
original 50%) in the sales of fertilizers prepared by
him – with the corporation having
responsibility of accounting for their finances and
distribution, including Bastida’s share in the profits.
Bastida was not re-employed upon the expiration of
his contract with Menzi & Co. However, Bastida
averred that the contract existing between him and
the corporation was that of a partnership for having
contributed his industry in exchange of 35% in the
share of profits.
Thus, he filed a complaint to have Menzi & Co give
a proper accounting of his share and that the books
should be revealed to him. Furthermore, for being a
partner, he further prays to have his share in the
goodwill and trademark of the partnership.
Issue:
Was a partnership formed between Bastida and
Menzi & Co?
Held:
No. The Court held that no partnership was formed
and that Bastida was merely an employee of Menzi
& Co. The Court maintained that although Bastida
had a share of 35% in the net profits of the fertilizer
business in compensation for his services of
supervising the mixture of the fertilizers, neither the
provisions of the contract nor the conduct of the
parties justified the finding that it was a contract of
partnership.
Bastida never made any objection as to the
1993 defendant’s manner of keeping the accounts or to
the charges. On the contrary, he approved and
signed every year the balance sheet and the profit
and loss statement. It was only when plaintiff’s
contract was about to expire and his contract was
not to be renewed that he made objections. To this,
the court applied Art. 116 of the Code of
Commerce – which required a common fund to
form a partnership. In the case at bar, there was no
common fund belonging to the parties as joint
owners or partners.
with an 18. Heirs of Tan Eng Kee v. Court of Appeals
G.R. No. 126881; October 3, 2000
sole Facts:
Tan Eng Kee and Tan Eng Lay was alleged by the
heirs of Tan Eng Kee to have formed a partnership
under the name Benguet Lumber. Thus, when the
said company was turned into a corporation,
Benguet Lumber Company, the heirs filed a
complaint for the proper accounting of the assets of
the partnership transferred to the corporation and
their shares of the decedent partner Tan Eng Kee
as heirs.
However, Tan Eng Lay contested that Tan Eng
Kee was merely an employee and that Benguet
Lumber was his sole proprietorship. Thus, the heirs
15
averred that there was an oral formation of a
partnership on the basis that:
Tan Eng Kee commanded and supervised the
employees along with Tan Eng Lay;
Tan Eng Kee also determined the price at which
the stocks were sold;
Tan Eng Kee also placed orders to the suppliers;
and
Both partners’ families lived together in the same
compound.
Tan Eng Lay, however, protested that:
Even a mere supervisor could give orders to
subordinates;
Even a messenger can order materials from
suppliers; and
Tan Eng Kee and Tan Eng Lay are brothers so that
the privilege was accorded due to their personal
relations.
Issue:
Was a partnership formed based on the
circumstances?
Held:
No. The Court held that a partnership was not
formed considering the circumstances. While the
Court acknowledged that an oral and unwritten
partnership may indeed be formed, the Court held
that the circumstances in the case at bar falls short
of proving the existence of a partnership.
Art. 1769 was applied which enumerated the rules
in determining a partnership. In this case, the best
evidence of a partnership – a contract of
partnership or articles of partnership – was non-
existent.
Furthermore, the NCC provides that in case of real
property or where the capital is more than
P3,000.00, the execution of a contract is necessary
and that a public instrument must be executed.
While it can be said that the NCC was still not in
effect when the supposed partnership was formed,
the other circumstances still fall short of proving a
partnership.
Aside from respondents’ arguments, the Court
made notice of the fact that Tan Eng Kee never
asked for accounting to assess his share in the
profits and losses. Moreover, the alleged
contribution of Tan Eng Kee of 80 pieces of G.I.
sheets is insufficient to prove the existence of a
partnership since co-ownership or co-possession is
not an indicium of the existence of a partnership.
19. Estanislao v. Court of Appeals
G.R. No. L-49982; April 27, 1988
Facts:
The petitioner and the private respondents were
siblings who co-owned a certain lot in QC, which
were being leased to Shell. They agreed to open
and operate a gas station with an initial investment
of P15,000.00 to be taken from the advance rentals
due to them from SHELL. Thus, a joint affidavit was
executed stating that the advanced rentals would
redound to the “capital investment” for the
operation of the partnership. Consequently, the
petitioner and the respondents executed another
document entitled “Additional Cash Pledge
Agreement”, with Shell as a signatory, indicating
that the advanced rentals of the same amount
would start on May 24, 1966, rather than May 25,
1996 of the earlier agreement.
The petitioner failed to render proper accounting of
the partnership. Thus, the private respondents filed
a complaint for the petitioner to render proper
accounting, and for the respondents to be given
their proper share in the profits. The petitioner
contended that there was no longer a partnership
existing between him and the respondents since
The subsequent agreement expressly superseded
the former agreement;
The subsequent agreement no longer referred to
as “capital investments”; and
The subsequent agreement was indicated that the
business was in the nature of a sole proprietorship.
Issue:
Did the subsequent agreement terminate the
existing partnership between the petitioner and the
respondents?
Held:
No. The Court held that the subsequent agreement
did not terminate the partnership. The Court
16
maintained that the provision containing the terms,
“cancels and supersedes” only refers to the
P15,000.00 amount which moved the date from
May 24, 1996 from May 25, 1996.
Furthermore, while the term “capital investment”
was no longer retained in the new agreement, and
that the agreement speaks of the petitioner as the
sole dealer, there still was no cancellation of the
partnership since these adjustments were only
proper since shell was a signatory and it was
against their company policy that business would
be a partnership and not a sole proprietorship.
Lastly, the Court made notice of the fact that the
petitioner himself gave periodic accounting of the
business, allowed authority to the respondent to
examine and audit the accounts. Clearly, therefore,
they bound themselves to contribute money to a
common fund with the intention of dividing the
profits among themselves.
20. SY vs. COURT OF APPEALS
[G.R. No. 142293. February 27, 2003]
Facts:  Ruling:
Sometime in 1958, private respondent Jaime
Sahot[5] started working as a truck helper for
petitioners’ family-owned trucking business named
Vicente Sy Trucking. In 1965, he became a truck
driver of the same family business, renamed T.
Paulino Trucking Service, later 6B’s Trucking
Corporation in 1985, and thereafter known as SBT
Trucking Corporation since 1994. Throughout all
these changes in names and for 36 years, private
respondent continuously served the trucking
business of petitioners. When Sahot was 59 years
old, he incurred several absences due to various
ailments. Particularly causing him pain was his left
thigh, which greatly affected the performance of his
task as a driver. He inquired about his medical and
retirement benefits with the Social Security System
(SSS) on April 25, 1994, but discovered that his
premium payments had not been remitted by his
employer.Sahot filed a week-long leave to get
medical attention. He was treated for EOR,
presleyopia, hypertensive retinopathy G II and
heart enlargement. Because of such, Belen Paulino
of the SBT Trucking Service management told him
to file a formal request for extension of his leave.
When Sahot applied for an extended leave, he was
threatened of termination of employment should he
refuse to go back to work. Eventually, Sahot was
dismissed from employment which prompted the
latter to file an illegal dismissal case with the
NLRC. For their part, petitioners admitted they had
a trucking business in the 1950s but denied
employing helpers and drivers. They contend that
private respondent was not illegally dismissed as a
driver because he was in fact petitioner’s industrial
partner. They add that it was not until the year
1994, when SBT Trucking Corporation was
established, and only then did respondent Sahot
become an employee of the company, with a
monthly salary that reached P4,160.00 at the time
of his separation. The NLRC and the CA ruled that
Sahot was an employee of the petitioner.
Issue: 
Whether Sahot is an industrial partner
No. Article 1767 of the Civil Code states that in 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. Not one of
these circumstances is present in this case. No
written agreement exists to prove the partnership
between the parties. Private respondent did not
contribute money, property or industry for the
purpose of engaging in the supposed business.
There is no proof that he was receiving a share in
the profits as a matter of course, during the period
when the trucking business was under operation.
Neither is there any proof that he had actively
participated in the management, administration and
adoption of policies of the business. Thus, the
NLRC and the CA did not err in reversing the
finding of the Labor Arbiter that private respondent
was an industrial partner from 1958 to 1994. On
this point, the Court affirmed the findings of the
appellate court and the NLRC. Private respondent
Jaime Sahot was not an industrial partner but an
17
employee of petitioners from 1958 to 1994. The
existence of an employer-employee relationship is
ultimately a question of fact and the findings
thereon by the NLRC, as affirmed by the Court of
Appeals, deserve not only respect but finality when
supported by substantial evidence. Substantial
evidence is such amount of relevant evidence
which a reasonable mind might accept as adequate
to justify a conclusion.
21. Heirs of Lim v. Lim
G.R. No. 172690; March 3, 2010
Facts:
Jose, together with Jimmy Yu and Norberto Yu
formed a partnership to engage in a trucking
business. After a year, Jose died leaving the heirs
of Jose including Elfledo Lim, wherein the latter
continued with the management of the trucking
business.
Eventually, Lim died. Thus, the heirs of Jose filed a
complaint for their share in the profits as heirs of
Jose and the proper accounting of the partnership
from when Jose died and Elfledo handled the
partnership. They aver, based on the testimony of
the only surviving partner of the business, Jimmy
Yu, that Elfledo was not a partner in the business.
However, Elfledo contended that he was indeed a
partner on the following basis:
Jose himself gave Elfledo P50,000.00 as a share in
the partnership;
Elfledo ran the affairs of the partnership, wielding
absolute control, power, and authority, without any
intervention or opposition whatsoever from any of
the petitioners;
Elfledo did not receive any wages or salaries;
that the heirs failed to demand periodic accounting
from Elfledo during his lifetime; and
all the properties of the business were registered
under the name of Elfledo.
Issue:
Was Elfledo a partner in the business?
Held:
Yes. The Court held that Elfledo was indeed a
partner in the business. The Court had the view
that the sole testimony of Jimmy Yu that Elfledo
was a not a partner cannot establish such fact in
the absence of any other evidence.
The Court must apply the rule on preponderance of
evidence (Rule 133, Section 1) and Art. 1769 of the
NCC. The Court agreed with all of the facts raised
by Elfledo in establishing that he is a partner.
Furthermore, the Court maintains that demand for
periodic accounting is evidence of partnership.
22. Arbes v. Polistico
G.R. No. 31057; September 7, 1929
Facts:
An association called “Turnuhan Polistico & Co”
was deemed by the court-appointed commissioner,
to which the court declared as well, as an unlawful
partnership. The defendants objected to the trial
court’s report. Consequently, they filed a motion for
a charitable institution to be included as a party
defendant applying the provisions of Art. 1666 of
the NCC which provides:
“A partnership must have a lawful object and must
be established for the common benefit of the
partners. When the dissolution of an unlawful
partnership is decreed, the profits shall be given to
charitable institutions of the domicile of the
partnership, or, in default of such, to those of the
province.”
Issue:
May a charitable institution be a party defendant
based on the provisions of Art. 1666?
Held:
No. The Court held that the application for the said
article is improper.  An unlawful partnership is a
void contract, and as such, no right or cause of
action can flow from it.
The Court made reference to Manresa which
propounded that the relevant logic that members of
an unlawful partnership should not be able to
recover profits since in the eyes of the law, the
partnership had not come into existence and that
no judicial action may flow from the contract.
However, such members may recover what they
have contributed not on the basis of the contract,
but on the basis of the mere contribution they have
18
made on the capital and to disable them to do so
would be an unjust sanction.
23. Woodhouse v. Halili
G.R. No. L-4811; July 31, 1953
Facts:
The plaintiff and the defendant entered into a
written agreement that, in the future, they shall
organize a partnership for the bottling and
distribution of Mission soft drinks with the plaintiff to
act as industrial partner or manager, and the
defendant as capitalist.
The agreement was entered into after the plaintiff
intimated to the defendant that he had an exclusive
franchise that of the bottling and distribution of the
said soft drinks and that it would be transferred to
the partnership or the plaintiff after they go to
Mission’s main base of operations in California.
Unfortunately, upon arrival, the defendant has
come to know that the exclusive rights for the
plaintiff had not yet been secured and was only
about to be secured.
Thus, the defendant refused to go further with the
agreement. The plaintiff then filed a complaint for
the execution of a contract of partnership and a
share of 30% in the profits.
Issues:
Is the agreement null and void?
May the execution of a contract of partnership be
enforced?
Held:
1)  No. The Court held that the agreement is
binding. The Court concluded that the contract
cannot be null and void since the plaintiff’s consent
in entering the contract is not vitiated. What was
vitiated was his consent in allowing the plaintiff
30% in the net share of the profits should the
partnership agreement push through, not the
contract itself.
2. No. The Court held that the plaintiff’s consent to
enter into the contract of partnership as stipulated
in the agreement is an obligation to do, which
cannot be forced by the Courts for being
unconstitutional. The contract itself indicated that
they shall enter into a partnership – in the future –
and not that the partnership was to be in force after
the conditions are fulfilled.
24. Litonjua v. Litonjua
G.R. No. 166299-300; December 13, 2005
Facts:
Aurelio Litonjua and Eduardo Litonjua executed a
private document entering into a partnership with
Yang for the formation of a Cineplex business. To
this, Aurelio Litonjua would act as an industrial
partner and contribute his shares in the Litonjua
family businesses (theatres, shipping land
development).
After the relationship between the two brothers
became sour, Aurelio filed with the court for
specific performance of accounting for his share in
the business and the payment to him of such.
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.
Issues:
Is the partnership void?
May Aurelio demand specific performance of his
share in the partnership?
Held:
1. Yes. The Court held that the partnership is void
precisely because of the legal provisions raised.
Aurelio contributed real rights to immovable
properties, which should be executed in a public
instrument. Moreover, the contributions exceeded
P3,000.00, which should also be in a public
instrument and recorded with SEC.
Moreover, an inventory had to be made and hereby
attached to the public instrument. Furthermore, the
Court gave notice of the fact that Aurelio cannot
contend that the contributions of real property were
only made after the formation of the partnership as
evidence proves otherwise.
25. Evangelista & CO. v. Abad Santos
G.R. No. L-31684; June 28, 1973
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Ponente: J. Makalintal
Facts:
On October 9, 1954 a co-partnership was formed
under the name of "Evangelista & Co." On June 7,
1955 the Articles of Co-partnership were amended
so as to include herein respondent, Estrella Abad
Santos, as industrial partner, with herein petitioners
Domingo C. Evangelista, Jr., Leonarda Atienza
Abad Santos and Conchita P. Navarro, the original
capitalist partners, remaining in that capacity, with
a contribution of P17,500 each
On December 17, 1963 herein respondent filed suit
against the three other partners, alleging that the
partnership, which was also made a party-
defendant, had been paying dividends to the
partners except to her; and that notwithstanding
her demands the defendants had refused and
continued to refuse to let her examine the
partnership books or to give her information
regarding the partnership affairs or to pay her any
share in the dividends declared by the partnership
The defendants, in their answer, denied ever
having declared dividends or distributed profits of
the partnership; denied likewise that the plaintiff
ever demanded that she be allowed to examine the
partnership books; and by way of affirmative
defense alleged that the amended Articles of Co-
partnership did not express the true agreement of
the parties, which was that the plaintiff was not an
industrial partner; that she did not in fact contribute
industry to the partnership.
Issue:
Whether Abad Santos is entitled to see the
partnership books because she is an industrial
partner in the partnership
Held:
Yes, Abad Santos is entitled to see the partnership
books.
The Supreme Court ruled that according to
ART. 1299. Any partner shall have the right to a
formal account as to partnership affairs:
(1)If he is wrongfully excluded from the partnership
business or possession of its property by his co-
partners;
(2)If the right exists under the terms of any
agreement;
(3)As provided by article 1807;
(4)Whenever other circumstances render it just and
reasonable."
In the case at hand, the company is estopped from
denying Abad Santos as an industrial partner
because it has been 8 years and the company
never corrected their agreement in order to show
their true intentions. The company never bothered
to correct those up until Abad Santos filed a
complaint.
26. Dan Fue Leung vs IAC and Leung Yiu
G.R. No. 70926 January 31, 1989
Facts:
Dan Fue Leung.The Sun Wah Panciteria was
registered as a single proprietorship and its
licenses and permits were issued to and in favor of
petitioner Dan Fue Leung as the sole proprietor.
Respondent Leung Yiu adduced evidence during
the trial of the case to show that Sun Wah
Panciteria was actually a partnership and that he
was one of the partners having contributed
P4,000.00 to its initial establishment.Lower court
ruled in favor of the private respondent. Petitioner
appealed the trial court's amended decision.
However,the questioned decision was further
modified and affirmed by the appellate court. 
Both the trial court and the appellate court declared
that the private petitioner is a partner and is entitled
to a share of the annual profits of the restaurant.
Hence, an appeal to the SC.The petitioner argues
that private respondent extended 'financial
assistance' to herein petitioner at the time of the
establishment of the Sun Wah Panciteria, in return
of which private respondent allegedly will receive a
share in the profits of the restaurant. It was,
therefore, error for the Appellate Court to
interpretor construe 'financial assistance' to mean
20
the contribution of capital by a partner to a
partnership.
Issue:
WON the private respondent is a partner of the
petitioner in the establishment of Sun Wah
Panciteria.
Held:
In essence, the private respondent alleged that
when Sun Wah Panciteria was established, he
gave P4,000.00 to the petitioner with the
understanding that he would be entitled to twenty-
two percent (22%) of the annual profit derived from
the operation of the said panciteria. These
allegations, which were proved, make the private
respondent and the petitioner partners in the
establishment of Sun Wah Panciteria because
Article 1767 of the Civil Code provides that"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". Therefore,
the lower courts did not err in construing the
complaint as one wherein the private respondent
asserted his rights as partner of the petitioner in the
establishment of the Sun Wah Panciteria,
notwithstanding the use of the term financial
assistance therein.SC affirmed appellate court's
decision and ordered the dissolution of the
partnership.
27. Lim Tanhu v. Hon. Jose R. Ramolete
G.R. No. L-40098; August 29, 1975
Ponente: J. Barredo
Facts:
Tan 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".  that of a common-law wife.
Defendant Antonio Lim Tanhu, Alfonso Leonardo
Ng Sua, Lim Teck Chuan, and Eng Chong
Leonardo, through fraud and machination, 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 buildings in the
cities of Cebu, Lapulapu, Mandaue, and the
municipalities of Talisay and Minglanilla.
She alleged in her complaint that after the 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 Tanhu, 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
the Glory Commercial Company, defendants
refused and stated that they would not give the
share of the plaintiff.
Issue:
Whether Tan has a right over the liquidated
properties of the partnership
Held:
No, Tan has no right over the liquidated properties
of the partnership
The Supreme Court held 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
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 yet been any liquidation of the partnership,
the only right plaintiff could have would be to what
21
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.  1973.
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.
28. 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,
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.
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