FRANCISCO REYES v ADOLFO REYES, et al.

FACTS
 In 2002, established his Reyes Barbecue business which was a sole proprietorship.
 In 2005, it was alleged that Frank offered his brothers, Adolfo, Ramon, and Carlos
(respondents) to form a partnership for the franchising of Reyes Barbecue as Francisco
needed capital to expand the business.
 The respondents agreed and provided Frank a capital fir such expansion.
 Adolfo and Carlos each contributed 100K in exchange for 24% and 15% share,
respectively.
 Ramon contributed a laptop worth 39,000 for a 25% share.
 For Frank, it was agreed that his contribution will be the “Reyes Barbecue”
trademark in his name.
 Frank denied proposing to form a partnership with his brothers and claimed that the
intent from the start was to form a franchising corporation with his brothers, not a
partnership.
 Due to disagreement, Frank abandoned the plan when he discovered that his trademark
had been fraudulently transferred to the employee of his nephew.
 The respondents then sent a demand letter to Frank for an accounting to determine
their share in the profits.
 Thereafter, the respondents filed a complaint against Frank and his wife praying that
judgment be rendered restoring management, control and administration of the
franchising business to them.
 The RTC dismissed the complaint and ruled that:
 No partnership was formed and finalized.
 The acts of Frank while trying to incorporate a corporation showed his intention
to continue the business a sole proprietorship.
 Respondents’ participation in the operation of business was very limited as they
did not participate in the actual management.
 On appeal, the CA reversed the trial court’s decision and ruled that:
 Even no partnership agreement was formalized nor any corporation registered,
when Frank received the contributions of the respondents and allowed them to
actively participate in the business, a contract for a joint venture was
perfected.

ISSUE: Whether or not a partnership, joint venture or any other commercial agreement was
entered into by Frank and his siblings for the expansion of the Reyes Barbecue business.

RULING:
 YES. However, the Court ruled that the CA is wrong in concluding that partnership does
not exist and joint venture was created.
 Art 1767 of the NCC 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.
 In Aurbach v Sanitary Wares, the Court likened a joint venture to a partnership stating
that it is hard to distinguish it from partnership having similar elements such as -
community of interest in the business, sharing of profits and losses, and mutual right of
control.
 It would also seem that under the PH law, a joint venture is a form of partnership and
should thus be governed by the law of partnerships. (The only difference is a
corporation cannot enter into a partnership but may engage in a joint venture)
 Having said that, although the structure of the subject business was not formalized, it
entered into a partnership since each of the brothers contributed money or property to a
common fund with the intention of the dividing the profits among themselves.
 Though there was no written agreement, the conduct of the parties supports the
conclusion that partnership exists.
 That even when the partnership with a capital that exceeds 3,000.00 has to be
registered to the SEC and the parties failed to do the same, the partnership still acquires
juridical personality.
 HENCE, there was a joint venture which is a form of partnership. The case was
remanded to RTC to determine portion of profits of the partners.