Santos v.

Reyes
Facts: Santos and Nieves Reyes verbally agreed that Santos would act as financier
while Nieves and Meliton Zabat would act as solicitors for membership and collectors of
loan payment in a lending venture business. 70% of the profits would go to Santos
awhile the Nieves and Zabat would get 15%each.
Nieves introduced Gragera of Monte Maria Corp, who obtained short term loans for the
partnership in consideration of commissions. In 1986, Nieves and Zabat executed an
agreement which formalized their earlier verbal agreement. But, Santos and Nieves
later discovered that Zabat engaged in the same lending business (their competitor).
Hence, Zabat was expelled from the partnership. On June 1987, Santos filed a
complaint for recovery of sum of money and damages against the respondents, alleging
them as employees who misappropriated the funds. Santos claimed that after of Zabat’s
activities, he ceases infusing funds thereby extinguishing the partnership.
Issue: Whether or not the partie’s relationship was one of partnership or of employer
Held: Yes, they were partners. 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. The “Articles of Agreement”,
stipulated that the signatories shall share the profits of the business in a 70-15-15
manner, with petitioner getting the lion’s share. This stipulation clearly proved the
establishment of a partnership.

Moran, Jr. v. CA
Facts: Pecson and Moran entered into an agreement for the printing of posters
featuring the delegates of the 1971 Constitutional Convention
• That 95k posters were supposed to be printed and sold at P2/each
• That each would contribute of 15k
• That Moran will supervise the work, while Pecson would receive a P1k monthly
commission
Pecson gave Moran 10k for which the latter issued a receipt. Only 2k posters were
printed but each was sold for P5.
• However, Moran then executed 2 promissory notes in favor of Pecson
Pecson then filed an action for the recovery of a sum of money for the return of his P10k
contribution, payment of his share in the profits that the partnership would have earned
TC: each party is entitled to rescind the contract since both failed to fulfill their
respective promises (Moran- the printing of 95k posters; Pecson- the 15k contribution)
CA: Moran must pay Pecson, among others, the amount of expected profits andn the
latter’s commission in the partnership
Issue: Whether or not Moran is obliged to give Pecson the amount of expected profits
from their partnership
Held:
• No, he is not.
• RULE: 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) and for interests and damages from the time
he should have complied with his obligations (Article 1788)
• Being a contract of partnership, each partner must share in the profits and the
losses of the venture for that is the essence of partnership
- Even in the assurance of the other partner that they would earn a huge
amount of profits, in the absence of fraud, the other cannot claim a
right to recover the highly speculative profits.
- In the present case, the fantastic nature of expected profits is obvious
that various factors need to be considered
- The failure of COMELEC to proclaim all 320 candidates of the
Constitutional Convention on time was a major factor in Moran’s
decision not to go on with the printing of all 95,000 posters
Facts: On February 22, 1971 Pecson and Moran entered into an agreement whereby
both would contribute P15,000 each for the purpose of printing 95,000 posters featuring
the delegates to the 1971 Constitutional Convention, with Moran actually supervising
the work; that Pecson would receive a commission of P1,000 a month starting on April
15, 1971 up to December 15, 1971; that on December 15, 1971, a liquidation of the
accounts in the distribution and printing of the 95,000 posters would be made; that
Pecson gave Moran P10,000 for which the latter issued a receipt; that only a few
posters were printed; that on or about May 28, 1971, Moran executed in favor of Pecson
a promissory note in the amount of P20,000 payable in two equal installments (P10,000
payable on or before June 15, 1971 and P10,000 payable on or before June 30, 1971),
the whole sum becoming due upon default in the payment of the first installment on the
date due, complete with the costs of collection."

Pecson filed with the CFI of Manila alleging that: (1) on the alleged partnership
agreement, the return of his contribution of P10,000.00, payment of his share in the
profits that the partnership would have earned, and, payment of unpaid commission; (2)
on the alleged promissory note, payment of the sum of P20,000.00; and, (3) moral and
exemplary damages and attorney's fees. CFI held that ordering defendant Isabelo C.
Moran, Jr. to return to plaintiff Mariano E. Pecson the sum of P17,000.00, with interest
at the legal rate from the filing of the complaint on June 19, 1972. Parties appealed to
the CA which rendered a decision against the petitioner to pay: Forty-seven thousand
five hundred (P47,500) (the amount that could have accrued to Pecson under their
agreement); (b) Eight thousand (P8,000), (the commission for eight months); (c) Seven
thousand (P7,000) (as a return of Pecson's investment for the Veteran's Project); and
(d) Legal interest on (a), (b) and (c) from the date the complaint was filed (up to the time
payment is made).

Issues: Whether or not CA grievously erred in holding petitioner liable to respondent in

the sum of P47,500 as the supposed expected profits due him;

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

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

Held:
• The rule is, when a partner who has undertaken to contribute a sum of money
fails to do so, he becomes a debtor of the partnership for whatever he may have
promised to contribute and for interests and damages from the time he should
have complied with his obligation. Thus in Uy v. Puzon (19 SCRA 598), which
interpreted Art. 2200 of the Civil Code of the Philippines, the Court allowed a total
of P200,000.00 compensatory damages in favor of the appellee because the
appellant therein was remiss in his obligations as a partner and as prime
contractor of the construction projects in question.
• Being a contract of partnership, each partner must share in the profits and losses
of the venture. That is the essence of a partnership. And even with an assurance
made by one of the partners that they would earn a huge amount of profits, in the
absence of fraud, the other partner cannot claim a right to recover the highly
speculative profits. It is a rare business venture guaranteed to give 100% profits.
The records show that the private respondent gave P10,000.00 to the petitioner.
The latter used this amount for the printing of 2,000 posters at a cost of P2.00
per poster or a total printing cost of P4,000.00. The records further show that the
2,000 copies were sold at P5.00 each. The gross income therefore w as
P10,000.00. Deducting the printing costs of P4,000.00 from the gross income of
P10,000.00 and with no evidence on the cost of distribution, the net profits
amount to only P6,000.00. Relative to the second alleged error, the petitioner
submits that the award of P8,000.00 as Pecson's supposed commission has no
justifiable basis in law. The partnership agreement stipulated that the petitioner
would give the private respondent a monthly commission of P1,000.00 from April
15, 1971 to December 15, 1971 for a total of eight monthly commissions. The
agreement does not state the basis of the commission. The payment of the
commission could only have been predicated on relatively extravagant profits.
• There is misapprehension of facts. The evidence of the private respondent
himself shows that his investment in the "Voice of Veterans" project amounted to
only P3,000.00. The remaining P4,000.00 was the amount of profit that the
private respondent expected to receive.
 • The respondent court erred when it concluded that the project never left the
ground because the project did take place. Only it failed. It was the private
respondent himself who presented a copy of the book entitled "Voice of the
Veterans" in the lower court as Exhibit "L". Therefore, it would be error to state
that the project never took place and on this basis decree the return of the private
respondent's investment.

Navarro v. CA
FACTS: Private respondent Olivia V. Yanson and Petitioner Lourdes Navarro were
engaged in the business of Air Freight Service Agency. Pursuant to the Agreement
which they entered, they agreed to operate the said Agency; It is the Private
Respondent Olivia Yanson who supplies the necessary equipment and money used in
the operation of the agency. Her brother in the person of Atty. Rodolfo Villaflores was
the manager thereof while petitioner Lourdes Navarro was the Cashier;

In compliance to her obligation as stated in their agreement, private respondent brought

into their business certain chattels or movables or personal properties. However, those
personal properties remain to be registered in her name; Among the provisions
stipulated in their agreement is the equal sharing of whatever proceeds realized from
their business; However, sometime on July 23, 1976, private respondent Olivia V.
Yanson, in order for her to recovery the above mentioned personal properties which she
brought into their business, filed a complaint against petitioner Lourdes Navarro for
"Delivery of Personal Properties With Damages and with an application for a writ of
replevin.

Private respondents' application for a writ of replevin was later approved/granted by the
trial court. For her defense, petitioner Navarro argue that she and private respondent
Yanson actually formed a verbal partnership which was engaged in the business of Air
Freight Service Agency. She contended that the decision sustaining the writ of replevin
is void since the properties belonging to the partnership do not actually belong to any of
the parties until the final disposition and winding up of the partnership.

ISSUE:
1. Whether or not there was a partnership that existed between the parties.
2. Whether the properties that were commonly used in the operation of Allied Air Freight
belonged to the alleged partnership business.

RULING:

Article 1767 of the New Civil Code defines the contract of partnership: Art. 1767. 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 proceeds
among themselves. A cursory examination of the evidences presented no proof that a
partnership, whether oral or written had been constituted. In fact, those movables
brought by the plaintiff for the use in the operation of the business remain registered in
her name. While there may have been co-ownership or co-possession of some items
and/or any sharing of proceeds by way of advances received by both plaintiff and the
defendant, these are not indicative and supportive of the existence of any partnership
between them. Art. 1769 par. 2 provides: Co-ownership or co-possession does not of
itself establish a partnership, whether such co-owners or co-possessors do or do not
share any profits made by the use of the property” Besides, the alleged profit was a
difference found after valuating the assets and not arising from the real operation of the
business. In accounting procedures, strictly, this could not be profit but a net worth.

Pastor v. Gaspar
Fortis v Gutierrez Hermanos
Facts:

Plaintiff Fortis is an employee of defendant Gutierrez Hermanos. Theformer brought an

action to recover a balance due him as salary forthe year 1902. He also alleged that he
was entitled, as salary, to 5 percent of the net profits of the business of the defendants
for said year. The complaint also contained a cause of action for the sum of 600pesos,
money expended by plaintiff for the defendants during the year1903. The lower court
ruled in favor of the plaintiff. The total judgment rendered amounted to P13, 025.40,
which was reduced to Philippine currency. The defendants moved for new trial but were
denied. They brought the case in the SC thru bill of exceptions; the
appellants(defendants) alleged that that the contract made the plaintiff a co-partner of
the defendants in the business, which they were carrying on.

Issue: WON the plaintiff is a co-partner of the defendants in the business.

Ruling:

NO. It was a mere contract of employment. The plaintiff had neither voice nor vote in the
management of the affairs of the company. The fact that the compensation received by
him was to be determined with reference to the profits made by the defendants in their
business did not in any sense make by a partner therein. The articles of partnership
between the defendants provided that the profits should be divided among the partners
named in a certain proportion. The contract made between the plaintiff and the then
manager of the defendant partnership did not in any way vary or modify this provision of
the articles of partnership.
Facts:
Bastida v. Menzi

receive 35 per cent of the net profits as compensation for his services. Menzi & Co., Inc., was to
advanced him P300 a month on account of his participation in the profits. It will be noted that
no provision was made for reimbursing Menzi & Co., Inc., in case there should be no net profits
at the end of the year. It is now well settled that the old rule that sharing profits as profits made
one a partner is overthrown.

It is nowhere stated in Exhibit A that the parties were establishing a partnership or intended to
become partners. Great stress in laid by the trial judge and plaintiff's attorneys on the fact that
in the sixth paragraph of Exhibit A the phrase "en sociedad con" is used in providing that
defendant corporation not engage in the business of prepared fertilizers except in association
with the plaintiff (en sociedad con). The fact is that en sociedad con as there used merely
means en reunion con or in association with, and does not carry the meaning of "in partnership
with".

Sardane v Ca
FACTS:
Petitioner Sardane is the owner of a Sardane Trucking Services. One day Sardane
borrowed money from the other guy by making promises and issuing several
promissory notes. On the due date the other guy wanted his money back but instead of
paying Sardane apologized for his failure to pay on time, and he promised the other guy
that he would pay him next time. After so many failed attempts to collect his money –
the other guy got mad and finally decided to seek the intervention of the court. Now
after so many failed attempts to collect the promised payment, the other guy,
Mr.Acojedo (Private Respondent), with so much hate on his heart, finally filed a
collection case against Sardane. Even during the scheduled date of the trial, Sardane,
as usual he did not show up. On motion by the petitioner(herein private respondent),
the Court issued an order declaring the Sardane in default and eventually after
presentation of evidence ex parte, the court rendered judgment by default in favor of the
petitioner. Sardane then appealed to the CFI, and he claimed that the promissory notes
were his contribution to the partnership; and that there is no contract of loan; thus he is
not indebted to the other guy. The CFI, believing the arguments of Sardane, ruled on his
favor thereby reversing the decision of the lower court by dismissing the complaint and
ordered the plaintiff-appellee Acojedo to pay said defendant-appellant P500.00 for
moral damages

ISSUE:
whether or not a partnership existed?

HELD:
NONE .The fact that he had received 50% of the net profits does not conclusively
establish that he was a partner of the private respondent herein. Article 1769(4) of the
Civil Code is explicit that while the receipt by a person of a share of the profits of a
business is prima facie evidence that he is a partner in the business, no such inference
shall be drawn if such profits were received in payment as wages of an employee.
Furthermore, herein petitioner had no voice in the management of the
affairs of the basnig. Under similar facts, this Court in the early case of Fortis vs.
Gutierrez Hermanos, denied the claim of the plaintiff therein that he was a partner in the
business of the defendant. The same rule was reiterated in Bastida vs. Menzi & Co.,
Inc., et al. which involved the same factual and legal milieu.