PARTNERSHIP and AGENCY II.

NATURE and CHARACTERISTICS TOCAO and BELO v CA and ANAY - Mike William Belo introduced Nenita Anay to his girlfriend, Marjorie Tocao. The three agreed to form a JV for the sale of cooking wares. Belo was to contri ute !".# million$ Tocao also contri uted some cash and she shall also act as %resident and &M$ and Anay shall e in charge of marketing. Belo and Tocao s%ecifically asked Anay ecause of her e'%erience and connections as a marketer. They agreed further that Anay shall recei(e the following) *+, share of annual net %rofits -- ., o(erriding commission for weekly sales -/+, of sales Anay will make herself -- ", share for her demo ser(ices They o%erated under the name &eminesse 0nter%rise, this name was howe(er registered as a sole %ro%rietorshi% with the Bureau of 1omestic Trade under Tocao. The JVA was not reduced to writing ecause Anay trusted Belo2s assurances. The (enture succeeded under Anay2s marketing %rowess. But then Anay and Tocao2s relationshi% soured. 3ne day, Tocao ad(ised one of the ranch managers that Anay was no longer a %art of the com%any. Anay then demanded that the com%any e audited 4 her shares gi(en to her. ISSUE: Whether or not there is a %artnershi%. HELD: 5es, though not reduced to writing, for a %artnershi% can e instituted in any form. The fact that it was registered as a sole %ro%rietorshi% is of no moment for such registration was only for its trade name. Anay was not e(en an em%loyee ecause when they (entured into the agreement, they e'%licitly agreed to %rofit sharing this is e(en though Anay was recei(ing commissions ecause this is only incidental to her efforts as a head marketer. The 6u%reme 7ourt also noted that a %artner who is e'cluded wrongfully from a %artnershi% is an innocent %artner. 8ence, the guilty %artner must gi(e him his due u%on the dissolution of the %artnershi% as well as damages or share in the %rofits 9reali:ed from the a%%ro%riation of the %artnershi% usiness and goodwill.; An innocent %artner thus %ossesses 9%ecuniary interest in e(ery e'isting contract that was incom%lete and in the trade name of the co<%artnershi% and assets at the time he was wrongfully e'%elled.; An unjustified dissolution y a %artner can su ject him to action for damages ecause y the mutual agency that arises in a %artnershi%, the doctrine of delectus personae allows the %artners to ha(e the power, although not necessarily the right to dissol(e the %artnershi%. Tocao2s unilateral e'clusion of Anay from the %artnershi% is shown y her memo to the 7u ao office %lainly stating that Anay was, as of 3cto er =, *=>?, no longer the (ice<%resident for sales of &eminesse 0nter%rise. By that memo, %etitioner Tocao effected her own withdrawal from the %artnershi% and considered herself as ha(ing ceased to e associated with the %artnershi% in the carrying on of the usiness.

Ne(ertheless, the %artnershi% was not terminated there y$ it continues until the winding u% of the usiness. NOTE: Motion for @econsideration filed y Tocao and Belo decided y the 67 on 6e%tem er "+, "++*. Belo is not a %artner. Anay was not a le to %ro(e that Belo in fact recei(ed %rofits from the com%any. Belo merely acted as a guarantor. 8is %artici%ation in the usiness meetings was not as a %artner ut as a guarantor. 8e in fact had only limited %artnershi%. Tocao also testified that Belo recei(ed nothing from the %rofits. 67 also noted that the %artnershi% was yet to e registered in the 607. As such, it was understanda le that Belo, who was after all %etitioner Tocao2s good friend and confidante, would occasionally %artici%ate in the affairs of the usiness, though ne(er in a formal or official ca%acity. TORRES v CA An *=.=, sisters Antonia Torres and 0meteria Baring entered into a joint (enture agreement with Manuel Torres. Bnder the agreement, the sisters agreed to e'ecute a deed of sale in fa(or Manuel o(er a %arcel of land, the sisters recei(ed no cash %ayment from Manuel ut the %romise of %rofits C.+, for the sisters and D+, for ManuelE F said %arcel of land is to e de(elo%ed as a su di(ision. Manuel then had the title of the land transferred in his name and he thereafter mortgaged the %ro%erty. 8e used the %roceeds from the mortgage to start uilding roads, cur s and gutters. Manuel also contracted an engineering firm for the uilding of housing units. But due to ad(erse claims in the land, %ros%ecti(e uyers were scared off and the su di(ision %roject e(entually failed. The sisters then filed a ci(il case against Manuel for damages eGui(alent to .+, of the (alue of the %ro%erty, which according to the sisters, is what2s due them as %er the contract. The lower court ruled in fa(or of Manuel and the 7ourt of A%%eals affirmed the lower court. The sisters then a%%ealed efore the 6u%reme 7ourt where they argued that there is no %artnershi% etween them and Manuel ecause the joint (enture agreement is (oid. ISSUE: Whether or not there e'ists a %artnershi%. HELD: 5es. The joint (enture agreement the sisters entered into with Manuel is a %artnershi% agreement where y they agreed to contri ute %ro%erty Ctheir landE which was to e de(elo%ed as a su di(ision. While on the other hand, though Manuel did not contri ute ca%ital, he is an industrial %artner for his contri ution for general e'%enses and other costs. Hurthermore, the income from the said %roject would e di(ided according to the sti%ulated %ercentage C.+<D+E. 7learly, the contract manifested the intention of the %arties to form a %artnershi%. Hurther still, the sisters

cannot in(oke their right to the .+, (alue of the %ro%erty and at the same time deny the same contract which entitles them to it. At any rate, the failure of the %artnershi% cannot e lamed on the sisters, nor can it e lamed to Manuel Cthe sisters on their a%%eal did not show e(idence as to Manuel2s fault in the failure of the %artnershi%E. The sisters must then ear their loss Cwhich is .+,E. Manuel does not ear the loss of the other D+, ecause as an industrial %artner he is e'em%t from losses.

Lim Ton Lim v P!i" #i$!in Gea% Ind. In& ' Bian&a

G.R. No. 136448 November 3, 1999 LIM TONG LIM, petitioner, vs. PHILIPPINE I!HING GE"R IN#$!TRIE!, IN%., respon&ent. A partnership may be deemed to exist among parties who agree to borrow money to pursue a business and to divide the profits or losses that may arise therefrom, even if it is shown that they have not contributed any capital of their own to a "common fund." Their contribution may be in the form of credit or industry, not necessarily cash or fixed assets. Being partner, they are all liable for debts incurred by or on behalf of the partnership. The liability for a contract entered into on behalf of an unincorporated association or ostensible corporation may lie in a person who may not have directly transacted on its behalf, but reaped benefits from that contract. '(ts) On behalf of "Ocean Quest ishing !orporation," Antonio !hua and "eter #ao entered into a !ontract for the purchase of fishing nets of various si$es from the "hilippine ishing %ear &ndustries, &nc. 'respondent(. They claimed that they were engaged in a business venture with "etitioner )im Tong )im, who however was not a signatory to the agreement. The buyers, however, failed to pay for the fishing nets and the floats. *espondent then filed a collection suit against !hua, #ao and "etitioner )im Tong )im. The suit was brought against the three in their capacities as general partners, on the allegation that "Ocean Quest ishing !orporation" was a

nonexistent corporation as shown by a !ertification from the +ecurities and ,xchange !ommission. T! - !hua, #ao and )im, as general partners 'of Ocean Quest !orporation(, were .ointly liable to pay respondent. CA-affirmed ishing

I!!$E) /O0 by their acts, )im, !hua and #ao could be deemed to have entered into a partnership1 HELD: YES. The facts as found by the two lower courts clearly showed that there existed a partnership among !hua, #ao and him, pursuant to Article 2343 of the !ivil !ode which provides5 Art. 2343 6 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. !hua, #ao and )im had decided to engage in a fishing business, which they started by buying boats worth "7.78 million, financed by a loan secured from 9esus )im who was petitioner:s brother. &n their !ompromise Agreement, they subse;uently revealed their intention to pay the loan with the proceeds of the sale of the boats, and to divide e;ually among them the excess or loss. These boats, the purchase and the repair of which were financed with borrowed money, fell under the term "common fund" under Article 2343. The contribution to such fund need not be cash or fixed assets< it could be an intangible li=e credit or industry. That the parties agreed that any loss or profit from the sale and operation of the boats would be divided e;ually among them also shows that they had indeed formed a partnership. >oreover, it is clear that the partnership extended not only to the purchase of the boat, but also to that of the nets and the floats. The fishing nets and the floats, both essential to fishing, were obviously ac;uired in furtherance of their business. &t would have been inconceivable for )im to involve himself so much in buying the boat but not in the ac;uisition of the aforesaid e;uipment, without which the business could not have proceeded.

%iven the preceding facts, it is clear that there was, among petitioner, !hua and #ao, a partnership engaged in the fishing business. They purchased the boats, which constituted the main assets of the partnership, and they agreed that the proceeds from the sales and operations thereof would be divided among them.
B. !artnershi% as a 7ontract < Art. *?.= (a%an)i""a (% v (a%an)i""a ' *%i$ HA7T6) The %resent case stems from the com%laint filed y Antonieta Jarantilla against Buena(entura @emotigue, 7ynthia @emotigue, Hederico Jarantilla, Jr., 1oroteo Jarantilla and Tomas Jarantilla, for the accounting of the assets and income of the co<ownershi%, for its %artition and the deli(ery of her share corres%onding to eight %ercent C>,E, and for damages. Antonieta claimed that in *=D., she had entered into an agreement with the defendants to engage in usiness through the e'ecution of a document denominated as IAcknowledgement of !artici%ating 7a%ital;. Antonieta also alleged that she had hel%ed in the management of the usiness they co<owned without recei(ing any salary. Antonieta further claimed co<ownershi% of certain %ro%erties Cthe su ject real %ro%ertiesE in the name of the defendants since the only way the defendants could ha(e %urchased these %ro%erties were through the %artnershi% as they had no other source of income. The res%ondents did not deny the e'istence and (alidity of the IAcknowledgement of !artici%ating 7a%italI and in fact used this as e(idence to su%%ort their claim that Antonieta2s >, share was limited to the usinesses enumerated therein. The res%ondents denied using the %artnershi%2s income to %urchase the su ject real %ro%erties. 1uring the course of the trial at the @T7, %etitioner Hederico Jarantilla, Jr., who was one of the original defendants, entered into a com%romise agreement *? with Antonieta Jarantilla wherein he su%%orted Antonieta2s claims and asserted that he too was entitled to si' %ercent C.,E of the su%%osed %artnershi% in the same manner as Antonieta was. A66B0) Whether or not the %artnershi% su ject of the Acknowledgement of !artici%ating 7a%ital funded the su ject real %ro%erties. 80J1) Bnder Article *?.? of the 7i(il 7ode, there are two essential elements in a contract of %artnershi%) CaE an agreement to contri ute money, %ro%erty or industry to a common fund$ and C E intent to di(ide the %rofits among the contracting %arties. The

first element is undou tedly %resent in the case at ar, for, admittedly, all the %arties in this case ha(e agreed to, and did, contri ute money and %ro%erty to a common fund. 8ence, the issue narrows down to their intent in acting as they did. At is not denied that all the %arties in this case ha(e agreed to contri ute ca%ital to a common fund to e a le to later on share its %rofits. They ha(e admitted this fact, agreed to its (eracity, and e(en su mitted one documentary e(idence to %ro(e such %artnershi% < the Acknowledgement of !artici%ating 7a%ital. The %etitioner himself claims his share to e .,, as stated in the Acknowledgement of !artici%ating 7a%ital. 8owe(er, %etitioner fails to reali:e that this document s%ecifically enumerated the usinesses co(ered y the %artnershi%) Manila Athletic 6u%%ly, @emotigue Trading in Aloilo 7ity and @emotigue Trading in 7ota ato 7ity. 6ince there was a clear agreement that the ca%ital the %artners contri uted went to the three usinesses, then there is no reason to de(iate from such agreement and go eyond the sti%ulations in the document. There is no e(idence that the su ject real %ro%erties were assets of the %artnershi% referred to in the Acknowledgement of !artici%ating 7a%ital. !etition denied.

&.@. No. *?".=+ March /, "+*+ 80A@6 3H J360 JAM, re%resented y 0J0NAT3 JAM, !etitioners, (s. JBJA0T VAJJA JAM, @es%ondent. 107A6A3N NA78B@A, J.) Hacts) !etitioners are the heirs of the late Jose Jim CJoseE. They filed a 7om%laint for !artition, Accounting and 1amages against res%ondent Juliet Villa Jim Cres%ondentE, widow of the late 0lfledo Jim C0lfledoE, who was the eldest son of Jose and 7resencia.

Jose, together with his friends, formed a %artnershi% to engage in the trucking usiness. Jose managed the o%erations of this trucking usiness until his death. Thereafter, JoseKs heirs, including 0lfledo, and %artners agreed to continue the usiness under the management of 0lfledo. !etitioners also alleged that 0lfledo was ne(er a %artner or an in(estor in the usiness and merely su%er(ised the %urchase of additional trucks using the income from the trucking usiness of the %artners. 0lfledo died, lea(ing res%ondent as his sole sur(i(ing heir. !etitioners claimed that res%ondent took o(er the administration of the aforementioned %ro%erties, which elonged to the estate of Jose, without their consent and a%%ro(al. @es%ondent claimed that 0lfledo was himself a %artner of Nor erto and Jimmy. @es%ondent also claimed that %er testimony of 7resencia, Jose ga(e 0lfledo !#+,+++.++ as the latterKs ca%ital in an informal %artnershi% with Jimmy and Nor erto. @es%ondent also alleged that when Jose died, he left no known assets, and the %artnershi% with Jimmy and Nor erto ceased u%on his demise. An essence, %etitioners argue that according to the testimony of Jimmy, the sole sur(i(ing %artner, 0lfledo was not a %artner$ and that he and Nor erto entered into a %artnershi% with Jose. Assue) Was there a %artnershi%L 8eld) We find that the instant !etition is ereft of merit.

A %artnershi% e'ists when two or more %ersons agree to %lace their money, effects, la or, and skill in lawful commerce or usiness, with the understanding that there shall e a %ro%ortionate sharing of the %rofits and losses among them. A contract of %artnershi% is defined y the 7i(il 7ode as one where two or more %ersons ind themsel(es to contri ute money, %ro%erty, or industry to a common fund, with the intention of di(iding the %rofits among themsel(es. Bndou tedly, the est e(idence would ha(e een the contract of %artnershi% or the articles of %artnershi%. Bnfortunately, there is none in this case, ecause the alleged %artnershi% was ne(er formally organi:ed. Nonetheless, we are asked to determine who etween Jose and 0lfledo was the I%artnerI in the trucking usiness. 0lfledo was not just a hired hel% ut one of the %artners in the trucking usiness, acti(e and (isi le in the running of its affairs from day one until this ceased o%erations u%on his demise. The e'tent of his control, administration and management of the %artnershi% and its usiness, the fact that its %ro%erties were %laced in his name, and that he was not %aid salary or other com%ensation y the %artners, are indicati(e of the fact that 0lfledo was a %artner and a controlling one at that. At is a%%arent that the other %artners only contri uted in the initial ca%ital ut had no say thereafter on how the usiness was ran. 0(idently it was through 0lfredo2s efforts and hard work that the %artnershi% was a le to acGuire more trucks and otherwise %ros%er. 0(en the a%%ellant %artici%ated in the affairs of the %artnershi% y acting as the ookkee%er sans salary.*a((%hi* At is nota le too that Jose Jim died when the %artnershi% was arely a year old, and the %artnershi% and its usiness not only continued ut also flourished. Af it were true that it was Jose Jim and not 0lfledo who was the %artner, then u%on his death the %artnershi% should ha(e een dissol(ed and its assets liGuidated. 3n the contrary, these were not done ut instead its o%eration continued under the helm of 0lfledo and without any %artici%ation from the heirs of Jose Jim.

P!i"e+ Minin Co%, v CIR ' Ba"d%

Facts: Petitioner Philex entered into an agreement with Baguio Gold Mining Corporation for the former to manage the latters mining claim know as the Sto. Mine. he parties agreement was denominated as !Power of "ttorne#$. he mine suffered continuing losses o%er the #ears& which resulted in petitioners withdrawal as manager of the mine. he parties executed a !Compromise 'ation in Pa#ment$& wherein the de(t of Baguio amounted to Php. ))*&)+,&---.--. Petitioner deducted said amount from its gross income in its annual tax income return as !loss on the settlement of recei%a(les from Baguio Gold against reser%es and allowances$. B./ disallowed the amount as deduction for (ad de(t. Petitioner claims that it entered a contract of agenc# e%idenced (# the !power of attorne#$ executed (# them and the

ad%ances made (# petitioners is in the nature of a loan and thus can (e deducted from its gross income. Court of ax "ppeals 0C "1 re2ected the claim and held that it is a partnership rather than an agenc#. C" affirmed C "

.ssue: 3hether or not it is an agenc#.

4eld: 5o. he lower courts correctl# held that the !Power of "ttorne#$ 0P"1 is the instrument material that is material in determining the true nature of the (usiness relationship (etween petitioner and Baguio. "n examination of the said P" re%eals that a partnership or 2oint %enture was indeed intended (# the parties. 3hile a corporation like the petitioner cannot generall# enter into a contract of partnership unless authori6ed (# law or its charter& it has (een held that it ma# enter into a 2oint %enture& which is akin to a particular partnership. he P" indicates that the parties had intended to create a P" and esta(lish a common fund for the purpose. he# also had a 2oint interest in the profits of the (usiness as shown (# the 7-87sharing of income of the mine.

Moreo%er& in an agenc# coupled with interest& it is the agenc# that cannot (e re%oked or withdrawn (# the principal due to an interest of a third part# that depends upon it or the mutual interest of (oth principal and agent. .n this case the non8re%ocation or non8withdrawal under the P" applies to the ad%ances made (# the petitioner who is the agent and not the principal under the contract. hus& it cannot (e inferred from the stipulation that it is an agenc#.

San)o$ v S,o-$e$ Re.e$ ' Pa) An June *=>., Hernando 6antos C?+,E, Nie(es @eyes C*#,E, and Melton Ma at C*#,E orally instituted a %artnershi% with them as %artners. Their (enture is to set u% a lending usiness where it was agreed that 6antos shall e financier and that Nie(es and Ma at shall contri ute their industry. **The percentages after their names denote their share in the profit. Jater, Nie(es introduced 7esar &ragera to 6antos. &ragera was the chairman of a cor%oration. At was agreed that the %artnershi% shall %ro(ide loans to the em%loyees of &ragera2s cor%oration and &ragera shall earn commission from loan %ayments. An August *=>., the three %artners %ut into writing their (er al agreement to form the %artnershi%. As earlier agreed, 6antos shall finance and Nie(es shall do the daily cash flow more %articularly from their dealings with &ragera, Ma at on the other hand shall e a loan in(estigator. But then later, Nie(es and 6antos found out that Ma at was engaged in another lending usiness which com%etes with their %artnershi% hence Ma at was e'%elled. The two continued with the %artnershi% and they took with them Nie(es2 hus and, Arsenio, who ecame their loan in(estigator.

Jater, 6antos accused the s%ouses of not remitting &ragera2s commissions to the latter. 8e sued them for collection of sum of money. The s%ouses countered that 6antos merely filed the com%laint ecause he did not want the s%ouses to get their shares in the %rofits. 6antos argued that the s%ouses, insofar as the dealing with &ragera is concerned, are merely his em%loyees. 6antos alleged that there is a distinct %artnershi% etween him and &ragera which is se%arate from the %artnershi% formed etween him, Ma at and Nie(es. The trial court as well as the 7ourt of A%%eals ruled against 6antos and ordered the latter to %ay the shares of the s%ouses. A66B0) Whether or not the s%ouses are %artners. 80J1) 5es. Though it is true that the original %artnershi% etween Ma at, 6antos and Nie(es was terminated when Ma at was e'%elled, the said %artnershi% was howe(er considered continued when Nie(es and 6antos continued engaging as usual in the lending usiness e(en getting Nie(es2 hus and, who resigned from the Asian 1e(elo%ment Bank, to e their loan in(estigator F who, in effect, su stituted Ma at. There is no se%arate %artnershi% etween 6antos and &ragera. The latter eing merely a commission agent of the %artnershi%. This is e(en though the %artnershi% was formali:ed shortly after &ragera met with 6antos CNote that Nie(es was e(en the one who introduced &ragera to 6antos e'actly for the %ur%ose of setting u% a lending agreement etween the cor%oration and the %artnershi%E. 83W0V0@, the order of the 7ourt of A%%eals directing 6antos to gi(e the s%ouses their shares in the %rofit is %remature. The accounting made y the trial court is ased on the 9total income; of the %artnershi%. 6uch total income calculated y the trial court did not consider the e'%enses sustained y the %artnershi%. All e'%enses incurred y the money<lending enter%rise of the %arties must first e deducted from the 9total income; in order to arri(e at the 9net %rofit; of the %artnershi%. The share of each one of them should e ased on this 9net %rofit; and not from the 9gross income; or 9total income;. To&ao v CA-(en CO&)o/e% 01 2333E DOCTRINE: At may e constituted in any form$ a %u licinstrument is necessary only where immo(a le %ro%erty or real rights are contri uted thereto. This im%lies that since a contract of %artnershi% is consensual, an oral contract of %artnershi% is as good as a written one. Where no immo(a le %ro%erty or real rights arein(ol(ed, what matters is that the %arties ha(e com%lied with the reGuisites of a %artnershi%. NATURE: !etition for re(iew on certiorari PONENTE: YNARES-SANTIAGO, J. #ACTS:

!etitioner William Belo introduced res%ondent NenitaAnay to %etitioner Marjorie Tocao, who con(eyed her desire to enter into a joint(enture with her for the im%ortation and local distri ution of kitchen cookwares. Bnder the joint (enture, Belo acted as ca%italist, Tocao as%resident and general manager, and Anay as head of the marketing de%artment and later, (ice< %resident for sales. The %arties agreed to useAnayKs name in securing distri utorshi% of cookware from West Bend 7om%any, a manufacturer of kitchen cookwares in Wisconsin, B.6.A. The%arties agreed further that Anay would e entitled to) C*E ten %ercent C*+,E of the annual net %rofits of the usiness$ C"E o(erridingcommission of si' %ercent C.,E of the o(erall weekly %roduction$ C/E thirty %ercent C/+,E of the sales she would make$ and CDE two %ercentC",E for her demonstration ser(ices. The agreement was not reduced to writing on the strength of BeloKs assurances that he was sincere,de%enda le and honest when it came to financial commitments. Anay ha(ing secured the distri utorshi% of cookware %roducts from the WestBend 7om%any and organi:ed the administrati(e staff and the sales force, the cookware usiness took off successfully. They o%erated underthe name of &eminesse 0nter%rise, a sole %ro%rietorshi% registered in Marjorie TocaoKs name, with office at ?*" @ufino Building, Ayala A(enue,Makati 7ity. Belo made good his monetary commitments to Anay. 3n 3cto er =, *=>?, Anay learned that Marjorie Tocao had signed a letteraddressed to the 7u ao sales office to the effect that she was no longer the (ice< %resident of &eminesse0nter%rise. The following day,3cto er *+, she recei(ed a note from Jina T. 7ru:, marketing manager, that Marjorie Tocao had arred her from holding office and conductingdemonstrations in oth Makati and 7u ao offices. Anay attem%ted to contact Belo. 6he wrote him twice to demand her o(erriding commissionfor the %eriod of January >, *=>> to He ruary #, *=>> and the audit of the com%any to determine her share in the net %rofits. When her letterswere not answered, Anay consulted her lawyer, who, in turn, wrote Belo a letter. 6till, that letter was not answered. Anay still recei(ed her fi(e%ercent C#,E o(erriding commission u% to 1ecem er *=>?. The following year, *=>>, she did not recei(e the same commission although thecom%any netted a gross sales of !*/,/++,/.+.++. 3n A%ril #, *=>>, Nenita A. Anay filed 7i(il 7ase No. >><#+=, a com%laint for sum of moneywith damagesagainst Marjorie 1. Tocao and William Belo efore the @egional Trial 7ourt of Makati, Branch *D+. The trial court held that therewas indeed an oral %artnershi% agreement etween the %laintiff and the defendants, ased on the following) CaE there was an intention tocreate a %artnershi%$ C E a common fund was esta lished through contri utions consisting of money and industry, and CcE there was a jointinterest in the %rofits. !etitioners a%%eal to the 7ourt of A%%ealswas dismissed. Their Motion for @econsideration was denied y the 7ourt of A%%eals for lack of merit. ISSUES:Whether or not a %artnershi% e'ists HELD 4RATIO5RULING:

5es. The issue of whether or not a %artnershi% e'ists is a factual matter which is within the e'clusi(e domain of oth the trial anda%%ellate courts. This 7ourt cannot set aside factual findings of such courts a sent any showing that there is no e(idence to su%%ort theconclusion drawn y the courta Guo. An this case, oth the trial court and the 7ourt of A%%eals are one in ruling that %etitioners and %ri(ateres%ondent esta lished a usiness %artnershi%. This 7ourt finds no reason to rule otherwise. To e considered a juridical %ersonality, a%artnershi% must fulfill these reGuisites) C*E two or more %ersons ind themsel(es to contri ute money, %ro%erty or industry to a commonfund$ and C"E intention on the %art of the %artners to di(ide the %rofits among themsel(es. At may e constituted in any form$ a %u licinstrument is necessary only where immo(a le %ro%erty or real rights are contri uted thereto. This im%lies that since a contract of %artnershi% is consensual, an oral contract of %artnershi% is as good as a written one. Where no immo(a le %ro%erty or real rights arein(ol(ed, what matters is that the %arties ha(e com%lied with the reGuisites of a %artnershi%. The fact that there a%%ears to e no record in the6ecurities and 0'change 7ommission of a %u lic instrument em odying the %artnershi% agreement %ursuant to Article *??" of the 7i(il 7ode did not cause the nullification of the %artnershi%. The %ertinent %ro(ision of the 7i(il 7ode on the matter states)Art. *?.>. The %artnershi% has a juridical %ersonality se%arate and distinct from that of each of the %artners, e(en in case of failure to com%lywith the reGuirements of article *??", first %aragra%h. DISPOSITION: 6HERE#ORE, the instant %etition for re(iew on certiorari is 10NA01. The %artnershi% among %etitioners and %ri(ate res%ondent is ordered dissol(ed, and the %arties are ordered to effect the winding u% and liGuidation of the %artnershi% %ursuant to the %ertinent %ro(isions of the 7i(il 7ode. This case is remanded to the @egional Trial 7ourt for %ro%er %roceedings relati(e to said dissolution. The a%%ealed decisions of the @egional Trial 7ourt and the 7ourt of A%%eals are AHHA@M01 with M31AHA7ATA3N6, as follows <<< *. !etitioners are ordered to su mit to the @egional Trial 7ourt a formal account of the %artnershi% affairs for the years *=>? and *=>>, %ursuant to Article *>+= of the 7i(il 7ode, in order to determine %ri(ate res%ondent2s ten %ercent C*+,E share in the net %rofits of the %artnershi%$ ". !etitioners are ordered, jointly and se(erally, to %ay %ri(ate res%ondent fi(e %ercent C#,E o(erriding commission for the one hundred and fifty C*#+E cookware sets a(aila le for dis%osition since the time %ri(ate res%ondent was wrongfully e'cluded from the %artnershi% y %etitioners$ /. !etitioners are ordered, jointly and se(erally, to %ay %ri(ate res%ondent o(erriding commission on the total %roduction which, for the %eriod co(ering January >, *=>> to He ruary #, *=>>, amounted to !/",+++.++$

D. !etitioners are ordered, jointly and se(erally, to %ay %ri(ate res%ondent moral damages in the amount of !#+,+++.++, e'em%lary damages in the amount of !#+,+++.++ and attorney2s fees in the amount of !"#,+++.++. 7OTE: *st di(ision. Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur. A#ISCO In$-%an&e Co%,o%a)ion v. CA - Mike !ursuant to 9reinsurance treaties,; a num er of local insurance firms formed themsel(es into a9%ool; in order to facilitate the handling of usiness contracted with a non resident foreignreinsurance com%any. After assessing their su mitted financial statement, the BA@ 7ommissioner reGuired them to %ay deficiency ta'es on the ground that they ha(e formed an unregistered %artnershi% ta'a le as a cor%oration ---AHA673) there was no %artnershi% N The reinsurance %olicies were written y them indi(idually and se%arately N Their lia ility was limited to the e'tent of their allocated share in the original risks thusreinsured N They did not share the same risk or solidary lia ility N There was no common fund N The e'ecuti(e oard of the %ool did not e'ercise control and management of its funds,unlike the oard of directors of a cor%oration N The %ool or clearing house was not and could not %ossi ly ha(e engaged in the usinessof reinsurance from which it could ha(e deri(ed income for itself ---7A) a %artnershi% was formed I$$-e: W3N the %ool or clearing house was a %artnershi% or association su ject to ta' as a cor%oration He"d: 5es, it is. The !hili%%ine legislature included in the conce%t of cor%orations those entities that resem led them such as unregistered %artnershi%s and associations. N !arenthetically, the NJ@72s inclusion of such entities in the ta' on cor%orations was made e(en clearer y the Ta' @eform Act of *==?, which amended the Ta' 7ode 67) the term %artnershi% includes syndicate, grou%, %ool, joint (enture and otherunincor%orated organi:ation, through or y means of which any usiness, financial o%eration, or(enture is carried on C0(angelista (. 7ollector of Anternal @e(enueE Art. *?.? of the 7i(il 7ode) reGuisite of a contract of %artnershi% Two or more %ersons mutually contri ute to a common fund With the intention to di(ide the %rofits among themsel(es

E7ANGELISTA v CIR 89:; - Mike !etitioners orrowed sum of money from their father and together with their own %ersonal funds they used said money to uy se(eral real %ro%erties. They then a%%ointed their rother C6imeonE as manager of the said real %ro%erties with %owers and authority to sell, lease or rent out said %ro%erties to third %ersons. They reali:ed rental income from the said %ro%erties for the %eriod *=D#<*=D=.3n 6e%tem er "D, *=#D res%ondent 7ollector of Anternal @e(enue demanded the %ayment of income ta' on cor%orations, real estate dealerKs fi'ed ta' and cor%oration residence ta' for the years *=D#<*=D=. The letter of demand and corres%onding assessments were deli(ered to %etitioners on 1ecem er /, *=#D, whereu%on they instituted the %resent case in the 7ourt of Ta' A%%eals, with a %rayer that Ithe decision of the res%ondent contained in his letter of demand dated 6e%tem er "D, *=#DI e re(ersed, and that they e a sol(ed from the %ayment of the ta'es in Guestion. 7TA denied their %etition and su seGuent M@ and New Trials were denied. 8ence this %etition. I$$-e: W-N %etitioners ha(e formed a %artnershi% and conseGuently, are su ject to the ta' on cor%orations %ro(ided for in the NA@7, as well as to the residence ta' for cor%orations and the real estate dealers fi'ed ta'. He"d: YES. The essential elements of a %artnershi% are two, namely) CaE an a %eemen) )o &on)%i/-)e mone.1,%o,e%). o% ind-$)%. )o a &ommon <-nd $ and C E in)en) )o divide )!e ,%o<i)$ amon )!e &on)%a&)in ,a%)ie$ . The first element is undou tedly %resent in the case at ar, for, admittedly, %etitioners ha(e agreed to,and did, contri ute money and %ro%erty to a common fund. B%on consideration of all the facts andcircumstances surrounding the case, we are fully satisfied that their %ur%ose was to engage in real estatetransactions for monetary gain and then di(ide the same among themsel(es, ecause of the followingo ser(ations, among others) C*E 6aid common fund was not something they found already in e'istence$ C"EThey in(ested the same, not merely in one transaction, ut in a series of transactions$ C/E The aforesaid lotswere not de(oted to residential %ur%oses, or to other %ersonal uses, of %etitioners herein.Although, taken singly, they might not suffice to esta lish the intent necessary to constitute a %artnershi%, thecollecti(e effect of these circumstances is such as to lea(e no room for dou t on the e'istence of said intent in%etitioners herein.Hor %ur%oses of the ta' on cor%orations, our National Anternal @e(enue 7ode, includes these %artnershi%s O with the e'ce%tion only of duly registered general co%artnershi%s O within the %ur(iew of the termIcor%oration.I At is, therefore, clear to our mind that %etitioners herein constitute a %artnershi%, insofar as said7ode is concerned and are su ject to the income ta' for cor%orations.

YULO 7. YANG CHIAO SENG - Mike 5ang 7hiao 6eng %ro%osed to form a %artnershi% with @osario 5ulo to run and o%erate a theatre on the %remises occu%ied y 7ine 3ro, !la:a 6ta. 7ru:, Manila, w- the ff %rinci%al conditions) C*E 5ang guarantees 5ulo a monthly %artici%ation of !/,+++ C"E %artnershi% shall e for a %eriod of " years and . months with the condition that if the land is e'%ro%riated, rendered im%ractica le for usiness, owner constructs a %ermanent uilding, then 5ulo2s right to lease and %artnershi% e(en if %eriod agreed u%on has not yet e'%ired$ C/E 5ulo is authori:ed to %ersonally conduct usiness in the lo y of the uilding$ and CDE after 1ec /*, *=D?, all im%ro(ements %laced y %artnershi% shall elong to 5ulo ut if %artnershi% is terminated efore la%se of * and P years, 5ang shall ha(e right to remo(e im%ro(ements. !arties esta lished, 95ang and 7o. Jtd.;, to e'ist from July *, *=D# F 1ec /*, *=D?. An June *=D., they e'ecuted a su%lemntry agreement e'tending the %artnershi% for / years Q from *-*-*=D> to *"-/*-*=#* The land on which the theater was constructed was leased y 5ulo from owners, 0milia 7arrion and Maria 7arrion 6anta Marina for an indefinite %eriod ut that after * year, such lease may e cancelled y either %arty u%on =+<day notice. An A%r *=D=, the owners notified 5ulo of their desire to cancel the lease contract come July. 5ulo and hus and rought a ci(il action to declare the lease for a indefinite %eriod. 3wners rought their own ci(il action for ejectment u%on 5ulo and 5ang. C#I) Two cases were heard jointly$ 7om%laint of 5ulo and 5ang dismissed declaring contract of lease terminated. CA) Affirmed An *=#+, 5ulo demanded from 5ang her share in the %rofits of the usiness. 5ang answered saying he had to sus%end %ayment ecause of %ending ejectment suit. 5ulo filed action in *=#D, alleging the e'istence of a %artnershi% etween them and that 5ang has refused to %ay her shares. De<endan)=$ Po$i)ion) Jease not %artnershi%$ %artnershi% was ado%ted as a su terfuge to get around the %rohi ition contained in the contract of lease etween the owners and the %laintiff against the su lease of the %ro%erty. TC) 1ismissal. No %artnershi% was created -w them ecause defendant has not actually contri uted the sum mentioned in the Articles of !artnershi% or any other amount. The agreement is a lease ecause %laintiff didn2t share either in the %rofits or in the losses of the usiness as reGuired y Art *?.= C77E and ecause %laintiff was granted a 9guaranteed %artici%ation; in the %rofits elies the su%%osed e'istence of a %artnershi%. Assue) Was the agreement a contract a lease or a %artnershi%L 80J1) 1ismissal. The agreement was a su lease not a %artnershi%. The following are the %e>-i$i)e$ o< ,a%)ne%$!i,: ?8@ two or more %ersons who /ind )!em$e"ve$ )o &on)%i/-)e mone., ,%o,e%). o% ind-$)%. to a &ommon <-nd$ ?2@ the in)en)ion Q divide )!e ,%o<i)$ among themsel(es CArt*?.*E !laintiff did not furnish the su%%osed !"+,+++ ca%ital nor did she anything in the management of the theatre. Neither has she demanded from defendant any accounting of the e'%enses and earnings of the usiness. 6he was a solutely silent with res%ect to any of the acts that a %artner should ha(e done$ all she did was to

recei(e her share of !/,+++ a month which cannot e inter%reted in any manner than a %ayment for the use of %remises which she had leased from the owners. Mendio"a v CA ' Civ

1. MENDIOLA vs. CA (2006)

Facts: Private respondent Pacific Forest Resources, Phils., Inc. (Pacfor) is a corporation organized and existing under the laws of California, U !. It is a su"sidiar# of Cellulose $ar%eting International (organized in weden). Private respondent Pacfor entered into a & ide !gree'ent on Representative (ffice %nown as Pacific Forest Resources (Phils.), Inc.with petitioner !rsenio ). $endiola (!)$), effective $a# *, *++,, &assu'ing that Pacfor-Phils. is alread# approved "# the ecurities and .xchange Co''ission / .C0 on the said date.)he ide !gree'ent outlines the "usiness relationship of the parties with regard to the Philippine operations of Pacfor. Private respondent will esta"lish a Pacfor representative office in the Philippines, to "e %nown as Pacfor Phils, and petitioner !)$ will "e its President. Petitioner1s "ase salar# and the overhead expenditures of the co'pan# shall "e "orne "# the representative office and funded "# Pacfor2!)$, since Pacfor Phils. is e3uall# owned on a ,4-,4 e3uit# "# !)$ and Pacfor-U !. In its application to the .C, private respondent Pacfor proposed to esta"lish its representative office in the Philippines with the purpose of 'onitoring and coordinating the 'ar%et activities for paper products. It also designated petitioner as its resident agent in the Philippines, authorized to accept su''ons and processes in all legal proceedings, and all notices affecting the corporation. )he ide !gree'ent was a'ended through a &Revised (perating and Profit haring

!gree'ent for the Representative (ffice 5nown as Pacific Forest Resources (Philippines),6 where the salar# of petitioner was increased to 789,444 per annu'. :oth agree'ents show that the operational expenses will "e "orne "# the representative office and funded "# all parties &as e3ual partners,6 while the profits and co''issions will "e shared a'ong the'. In ;ul# <444, petitioner wrote 5evin =ale#, >ice President for !sia of Pacfor, see%ing confir'ation of his ,4? e3uit# of Pacfor Phils. Private respondent Pacfor, through @illia' Aleason, its President, replied that petitioner is not a part-owner of Pacfor Phils. "ecause the latter is 'erel# Pacfor-U !1s representative office and not an entit# separate and distinct fro' Pacfor-U !. &It1s si'pl# a Btheoretical co'pan#1 with the purpose of dividing the inco'e ,4-

,4.6Petitioner presu'a"l# %new of this arrange'ent fro' the start, having "een the one to propose to private respondent Pacfor the setting up of a representative office, and &not a "ranch office6 in the Philippines to save on taxes.Petitioner clai'ed that he was all along 'ade to "elieve that he was in a Coint venture with the'. De alleged he would have "een "etter off re'aining as an independent agent or representative of Pacfor-U ! as !)$ $ar%eting Corp.Dad he %nown that no Coint venture existed, he would not have allowed Pacfor to ta%e the profita"le "usiness of his own co'pan#, !)$ $ar%eting Corp. Petitioner raised other issues, such as the rentals of office furniture, salar# of the e'plo#ees, co'pan# car, as well as co''issions allegedl# due hi'. )he issues were not resolved, hence, in (cto"er <444, petitioner wrote Pacfor-U ! de'anding pa#'ent of unpaid co''issions and office furniture and e3uip'ent rentals, a'ounting to 'ore than one 'illion dollars. Private respondent Pacfor, through counsel, ordered petitioner to turn over to it all papers, docu'ents, files, records, and other 'aterials in his or !)$ $ar%eting Corporation1s possession that "elong to Pacfor or Pacfor Phils. (n =ece'"er *9, <444, private respondent Pacfor also re3uired petitioner to re'it 'ore than three hundred thousand-peso Christ'as giveawa# fund for clients of Pacfor Phils.Eastl#, private respondent Pacfor withdrew all its offers of settle'ent and ordered petitioner to transfer title and turn over to it possession of the service car. (n the "asis of the & ide !gree'ent,6 petitioner insisted that he and Pacfor e3uall# own Pacfor Phils. )hus, it follows that he and Pacfor li%ewise own, on a ,42,4 "asis, Pacfor Phils.1 office furniture and e3uip'ent and the service car. De also reiterated his de'and for unpaid co''issions, and proposed to offset these with the re'aining Christ'as giveawa# fund in his possession. Further'ore, he did not renew the lease contract with Pulp and Paper, Inc., the lessor of the office pre'ises of Pacfor Phils., wherein he was the signator# to the lease agree'ent. Private respondent Pacfor placed petitioner on preventive suspension and ordered hi' to show cause wh# no disciplinar# action should "e ta%en against hi'. Private respondent Pacfor charged petitioner with willful diso"edience and serious 'isconduct for his refusal to turn over the service car and the Christ'as giveawa# fund which he applied to his alleged unpaid co''issions. Private respondent also alleged loss of confidence and gross neglect of dut# on the part of petitioner for allegedl# allowing another corporation owned "# petitioner1s relatives, Digh .nd Products, Inc. (D.PI), to use the sa'e telephone and facsi'ile nu'"ers of Pacfor, to

possi"l# steal and divert the sales and "usiness of private respondent for D.PI1s principal, International Forest Products, a co'petitor of private respondent. Petitioner denied the charges. De reiterated that he considered the i'port of Pacfor President @illia' Aleason1s letters as a &cessation of his position and of the existence of Pacfor Phils.6 De li%ewise infor'ed private respondent Pacfor that !)$ $ar%eting Corp. now occupies Pacfor Phils.1 office pre'ises, and de'anded pa#'ent of his separation pa#. Petitioner filed his co'plaint for illegal dis'issal recover# of separation pa# and att#1s fees with the FERC. Private respondent directed petitioner to explain wh# he should not "e disciplined for serious 'isconduct and conflict of interest. Private respondent charged petitioner anew with serious 'isconduct for the latter1s alleged act of fraud and 'isrepresentation in authorizing the release of an additional peso salar# for hi'self, "esides the dollar salar# agreed upon "# the parties. Private respondent also accused petitioner of dislo#alt# and representation of conflicting interests for having continued using the Pacfor Phils.1 office for operations of D.PI. Issues: @hether an e'plo#er-e'plo#ee relationship exists "etween petitioner and private respondent Pacfor. Held: There was an employer employee relationship but no partnership. Petitioner argues that he is an industrial partner of the partnership he for'ed with private respondent Pacfor, and also an e'plo#ee of the partnership. Petitioner insists that an industrial partner 'a# at the sa'e ti'e "e an e'plo#ee of the partnership, provided there is such an agree'ent, which, in this case, is the & ide !gree'ent6 and the &Revised (perating and Profit haring !gree'ent.6@e hold that petitioner is an e'plo#ee of private respondent Pacfor and that no partnership or co-ownership exists "etween the parties. Further'ore, in a partnership, 'e'"ers "eco'e co-owners (co-possessors) of what is contri"uted to the fir' capital and of all the propert# that 'a# "e ac3uired there"#. .ach partner possesses a Coint interest in whole partnership propert#. If the relation does not have this feature, it is not one of partnership. In this case, the parties 'erel# shared profits. )his alone does not 'a%e a partnership.

! corporation cannot "eco'e a 'e'"er of a partnership in the a"sence of express authorization "# statute or charter. < reasonsG (*) )he 'utual agenc# "etween the partners, where"# the corporation would "e "ound "# the acts of persons who are not its dul# appointed and authorized agents and officers, would "e inconsistent with the polic# of the law that the corporation shall 'anage its own affairs separatel# and exclusivel#H (<) uch an arrange'ent would i'properl# allow corporate propert# to "eco'e su"Cect to ris%s not conte'plated "# the stoc%holders when the# originall# invested in the corporation.

*M T+'son v ,o-'nos . ,i'n('

G.R. No. L/4930 M'1 28, 1904 *. M. T$"!ON 3 %O., IN%., represente& b1 it M'n'4in4 P"RTNER, GREGORI" "R"NET", IN%., p-'inti55/'ppe--ee, vs. 6$IRINO ,OL"7O!, &e5en&'nt/'ppe--'nt. '(ts) "laintiff:s filed a complaint against the defendant for recovery land. ?efendant, in his answer, sets up prescription and title in himself thru "open, continuous, exclusive and public and notorious possession 'of land in dispute( under claim of ownership, adverse to the entire world by defendant and his predecessor in interest" from "time in-memorial". ?efendant also contends that plaintiff or its predecessors in interest thru "fraud or error and without =nowledge 'of( or interest either personal or thru publication to defendant and@or predecessors in interest." The answer therefore prays that the complaint be dismissed with costs and plaintiff re;uired to reconvey the land to defendant or pay its value. T! - rendered .udgment for plaintiff One of the defendantAs contentions is that the trial court erred in not dismissing the case on the ground that the case was not brought by the real party in interest.

I!!$E) /O0 the case should be dismissed for it was not brought by the real party in interest1 HEL#) 0O. /hat the *ules of !ourt re;uire is that an action be brought in the name of, but not necessarily by, the real party in interest. '+ection B, *ule B.( &n fact the practice is for an attorney-at-law to bring the action, that is to file the complaint, in the name of the plaintiff. That practice appears to have been followed in this case, since the complaint is signed by the law firm of Araneta and Araneta, "counsel for plaintiff" and commences with the statement "comes now plaintiff, through its undersigned counsel." It is tr+e t8't t8e (omp-'int '-so st'tes t8't t8e p-'inti55 is 9represente& 8erein b1 its M'n'4in4 P'rtner Gre4orio "r'net', In(.9, 'not8er (orpor'tion, b+t t8ere is not8in4 '4'inst one (orpor'tion bein4 represente& b1 'not8er person, n't+r'- or :+ri&i('-, in ' s+it in (o+rt. T8e (ontention t8't Gre4orio "r'net', In(. ('nnot '(t 's m'n'4in4 p'rtner 5or p-'inti55 on t8e t8eor1 t8't it is i--e4'5or t;o (orpor'tions to enter into ' p'rtners8ip is ;it8o+t merit, 5or t8e tr+e r+-e is t8't 9t8o+48 ' (orpor'tion 8's no po;er to enter into ' p'rtners8ip, it m'1 nevert8e-ess enter into ' :oint vent+re ;it8 'not8er ;8ere t8e n't+re o5 t8't vent+re is in -ine ;it8 t8e b+siness '+t8ori<e& b1 its (8'rter.9 '/yoming-&ndiana Oil %as !o. vs. /eston, CD A. ). *., 2DE7, citing B letcher !yc. of !orp., 2DCB.( There is nothing in the record to indicate that the venture in which plaintiff is represented by %regorio Araneta, &nc. as "its managing partner" is not in line with the corporate business of either of them.
A-%/a&! v$. Sani)a%. 6a%e$ - Mike H) This consolidated %etition assailed the decision of the 7A directing a certain MANN0@ 3H 0J07TA3N 3H 3HHA70@6 AN T80 B3A@1 3H 1A@07T3@6 NThere are two grou%s in this case, the La dameo %o-, com%osed of Hili%ino in(estors and the Ame%i&an S)anda%d In&. CA6AE com%osed of foreign in(estors. The A6A &rou% and %etitioner 6ala:ar C&.@. Nos. ?#=?#<?.E contend that the actual intention of the %arties should e (iewed strictly on the IAgreementI dated August *#,*=." wherein it is clearly stated that the %artiesK intention was to form a cor%oration and not a JV A) W83 were the duly elected directorsL HH factors should e determined) NC*E the nature of the usiness esta lished y the %arties whether it was a joint (enture or a cor%oration

8) <While certain %ro(isions of the Agreement would make it a%%ear that the %arties thereto disclaim eing %artners or joint (enturers such disclaimer is directed at third %arties and is not inconsistent with, and does not %reclude, the e'istence of two distinct grou%s of stockholders in 6aniwares one of which Cthe !hili%%ine An(estorsE shall constitute the majority, and the other A6A shall constitute the minority stockholder. An any e(ent, the eviden) in)en)ion of the !hili%%ine An(estors and A6A in entering into the Agreement is to enter into a Aoin) ven)-%e en)e%,%i$e < An e'amination of the Agreement shows that certain %ro(isions were inccuded to %rotect the interests of A6A as the minority. Hor e'am%le, the (ote of ? out of = directors is reGuired in certain enumerated cor%orate acts. A6A is contractually entitled to designate a mem er of the 0'ecuti(e 7ommittee and the (ote of this mem er is reGuired for certain transactions < The Agreement also reGuires a ?#, su%er<majority (ote for the amendment of the articles and y<laws of 6aniwares. A6A is also gi(en the right to designate the %resident and %lant manager .The Agreement further %ro(ides that the sales %olicy of 6aniwares shall e that which is normally followed y A6A and that 6aniwares should not e'%ort I6tandardI %roducts otherwise than through A6AKs 0'%ort Marketing 6er(ices. Bnder the Agreement, A6A agreed to %ro(ide technology and know<how to 6aniwares 4 the latter %aid royalties for the same. < JV generally understood to mean an organi ation formed for some temporar! purpose. "t is in fact hardl! distinguisha#le from the partnership, since their elements are similar communit! of interest in the #usiness, sharing of profits and losses, and a mutual right of control. < The main distinction cited y most o%inions in common law jurisdictions is that the ,a%)ne%$!i, &on)em,"a)e$ a ene%a" /-$ine$$ Bi)! $ome de %ee o< &on)in-i)., while )!e Aoin) ven)-%e i$ <o%med <o% )!e e+e&-)ion o< a $in "e )%an$a&)ion1 and i$ )!-$ o< a )em,o%a%. na)-%e.
De"-ao v$. Ca$)ee" HA7T6) Nicanor 7asteel, as the first occu%ant, filed a fish%ond a%%lication for a ig tract of swam%y land in 1a(ao. Because of the threat %oised u%on y su seGuent a%%licants who entered u%on and s%read themsel(es within the area, 7asteel reali:ed the urgent necessity of e'%anding his occu%ation y constructing dikes and culti(ating marketa le fishes, in order to %re(ent old and new sGuatters from usur%ing the land. But lacking financial resources, he sought financial aid from his uncle Heli%e 1eluao who then e'tended loans totaling more or less !"?,+++ with which to finance the needed im%ro(ements on the fish%ond. Because of the loan, 7asteel and 1eluao entered into a Icontract of ser(iceI with the agreement to di(ide the su ject %ro%erty after the award- grant of a%%lication y the &o(ernment to 7asteel. Thereafter, a wide %roducti(e fish%ond was uilt. 0(entually, after relentlessly %ursuing his claim, the land was finally awarded to 7asteel. After a time, 7asteel for ade Anocencia 1eluao from further administering the fish%ond, and ejected the latterKs re%resentati(e from the %remises. Alleging (iolation of the contract of ser(ice, s%ouses 1eluao filed an action for s%ecific %erformance and damages against Nicanor 7asteel A66B0) Whether or not oth %arties may (alidly di(ide the fish%ond as agreed u%on y them. 80J1) N3.

The e(idence %re%onderates in fa(or of the (iew that the initial intention of the %arties was not to form a co<ownershi% ut to esta lish a %artnershi% O Anocencia 1eluao as ca%italist %artner and 7asteel as industrial %artner O the ultimate undertaking of which was to di(ide into two eGual %arts such %ortion of the fish%ond as might ha(e een de(elo%ed y the amount e'tended y the %laintiffs<a%%ellees, with the further %ro(ision that 7asteel should reim urse the e'%enses incurred y the a%%ellees o(er one<half of the fish%ond that would %ertain to him. 6ince the %artnershi% had for its o ject the di(ision into two eGual %arts of the fish%ond etween the a%%ellees and the a%%ellant after it shall ha(e een awarded to the latter, and therefore it en(isaged the unauthori ed transfer of one<half to %arties other than the a%%licant 7asteel, it was dissol(ed y the a%%ro(al of his a%%lication and the award to him of the fish%ond. The a%%ro(al was an e(ent which made it unlawful for the usiness of the %artnershi% to e carried on or for the mem ers to carry it on in %artnershi% thus dissol(ing the same. As reiterated in Art. *>/+C/E of the 7i(il 7ode, one of the causes for the dissolution of a %artnershi%, I... any e(ent which makes it unlawful for the usiness of the %artnershi% to e carried on or for the mem ers to carry it on in %artnershi%.I The a%%ro(al of the a%%ellantKs fish%ond a%%lication rought to the fore se(eral %ro(isions of law which made the continuation of the %artnershi% unlawful and therefore caused its i%so facto dissolution. The case was remanded to the lower court for the rece%tion of e(idence relati(e to an accounting to determine %rofits and shares reali:ed y oth %arties.

A%/e$ v Po"i$)i&o ' *%i$ Hacts) Ar es et al C%laintiffsE were mem ers or shareholders of Turnuhan !olistico and !olistico et al CdefendantsE were directors, %resident<treasurer and secretary of the association. This case has een rought for the second time to the 67. The first one was when the same %laintiffs a%%eared from the order of the court elow sustaining the defendantKs demurrer, and reGuiring the former to amend their com%laint within a %eriod, so as to include all the mem ers of ITurnuhan !olistico 4 7o.,I either as %laintiffs or as defendants. This court held then that in an action against the officers of a (oluntary association to wind u% its affairs and enforce an accounting for money and %ro%erty in their %ossessions, it is not necessary that all mem ers of the association e made %arties to the action. CBorlasa (s. !olistico, D? !hil., /D#.E Ruintos, of the Ansular AuditorKs 3ffice, was a%%ointed to e'amine all the ooks, documents, and accounts of ITurnuhan !olistico 4 7o.,I and to recei(e whate(er e(idence the %arties might desire to %resent. !olistico et al o jected to the commissionerKs re%ort. The @T7, howe(er, held that the association ITurnuhan !olistico 4 7o.I is unlawful, and sentenced the defendants jointly and se(erally to return the amount of !"D,.+?.>+, as well as the documents showing the uncollected credits of the association, to Ar es, et al in and to the rest of the mem ers of the said association re%resented y said %laintiffs. !olistico et al contend that ecause ITurnuhan !olistico 4 7o.,I is unlawful, some charita le institution to whom the %artnershi%

funds may e ordered to e turned o(er, should e included, as a %arty defendant. The a%%ellants refer to article *... of the 7i(il 7ode, which %ro(ides) A %artnershi% must ha(e a lawful o ject, and must e esta lished for the common enefit of the %artners. When the dissolution of an unlawful %artnershi% is decreed, the %rofits shall e gi(en to charita le institutions of the domicile of the %artnershi%, or, in default of such, to those of the %ro(ince. Assue) W-N the charita le institutions are considered as necessary %arties for the total dis%osition of this caseL 8eld) No. The %artnershi% is an unlawful %artnershi%. According to %aragra%h " of Art *... of the 7i(il 7ode, when an unlawful %artnershi% is judicially dissol(ed, the earnings shall not e dis%osed of as %rofits, ut shall e gi(e to charita le institutions. But in a case like the one at ar, whose o ject is to determine the rights of the %arties, and to liGuidate the unlawful %artnershi%, no charita le institution should e included as defendant, as the a%%ellants content, ecause it is not a necessary %arty to the case. Art. *... of the 7i(il 7ode allows no action for the %ur%ose of o taining the earnings made y the unlawful %artnershi%, during its e'istence, as a result of the usiness in which it was engaged$ ecause for that %ur%ose the %artner will ha(e to ase his action on the %artnershi% contract which is null and without legal e'istence y reason of its unlawful o ject, and it is self<e(ident that what does not e'ist cannot e a cause of action. #e%nandeC v$. De "a Ro$a #a&)$: 3n the %art of %laintiff Hernande:, he claims that he entered into a (er al agreement with defendant 1e la @osa to form a %artnershi% for the %urchase of cascoes with the undertaking that the defendant will uy the cascoes and that each %artner will furnish such amount as he could, while the %rofits will e di(ided %ro%ortionately. !laintiff furnished !/++ for casco No. *#*# and !>"# for casco No. "+>=, oth of which were %laced under the name of the defendant only. An A%ril *=++, the %arties undertook to draw u% articles of their %artnershi% for the %ur%ose of em odying it in an authentic document. The agreement howe(er did not materiali:e ecause defendant %ro%osed articles which were materially different from their (er al agreement, and he was also unwilling to include casco No. "+>= in the %artnershi%. Because the cascoes were under the management of the defendant, the %laintiff demanded an accounting o(er it to which the defendant refused claiming that no %artnershi% e'isted etween them. 1e la @osa, on the other hand, admits that he desired to form a %artnershi% with the %laintiff ut denies that any agreement was e(er consummated. Moreo(er, he denied recei(ing any money furnished y %laintiff for casco No. *#*#, ut claims that he merely orrowed the !/++ on his indi(idual account from the akery usiness in which %laintiff was a co<%artner. And as for the !>"# furnished y the %laintiff, the defendant claims that it was actually for casco No. *#*# and not for casco No. "+>=. 8e also added that the re%airs made on the two cascoes were e'clusi(ely orne y

him, and that he returned a sum of !*,*"# to %laintiff with an e'%ress reser(ation on his %art of all his rights as a %artner. I$$-e: aE W-N a %artnershi% e'isted etween the %arties. 5es. E W-N the %artnershi% was terminated when the defendant returned the !*,*"# to %laintiff. No. He"d: aE The essential %oints u%on which the minds of the %arties must meet in a contract of %artnershi% are *E mutual contri ution and "E joint interest in the %rofits. The fact that the defendant recei(ed money furnished y the %laintiff for the %ur%ose of using it to %urchase the cascoes esta lishes the first element of the %artnershi%, mutual contri ution to a common stock. Hor the second element, the fact that the formation of %artnershi% had een a su ject of negotiation etween them, e(en efore the %urchase of the first casco, and that oth %arties intended to %urchase the cascoes in common satisfies the reGuirement that there should e an intention on the %art of oth %arties to share the %rofits. With these, a com%lete and %erfect contract of %artnershi% was entered into y the %arties. At must e noted howe(er that this %artnershi% was su ject to a sus%ensi(e condition which is the e'ecution of a written agreement regarding the distri ution of %rofits, character of %artnershi%, etc. But since the defendant actually %urchased the cascoes, it would seem that the %artnershi% already e'isted. And as furthermore %ro(ided y the 7i(il 7ode, a written agreement was not necessary in order to gi(e efficacy to the (er al agreement of the %artnershi% ecause the contri utions of the %artners to the %artnershi% were not in the form of immo(a les. E 1uring trial, the court was a le to %ro(e that %laintiff actually furnished some amount for the re%air of the cascoes and that it was %resumed that a %rofit has een o tained y the defendant %rior to the return of the money. With these, the return of the !*,*"# fell short of the amount which the %laintiff has actually contri uted to the %artnershi%. Hor these reasons, the acce%tance y the %laintiff of the amount returned y the defendant did not ha(e the effect of terminating the legal e'istence of the %artnershi% y con(erting it into a societas leonina. The court also %ro(ed that there was no intention on the %art of the %laintiff, in acce%ting the money, to relinGuish his rights as a %artner. 3n the contrary he notified defendant that he wai(ed none of his rights in the %artnershi%. Also the lack of recognition on the %art of the defendant of the %laintiff2s right in the %artnershi% %ro%erty and in the %rofits does not gi(e the former the right to force a dissolution u%on the later u%on the terms which the %laintiff is unwilling to acce%t. A %artnershi% therefore e'isted etween the two and cascoes No. *#*# and "+>= are %artnershi% %ro%erties. @ealu it ( Jaso F 7ary &.@. No. *?>?>" 6e%tem er "*, "+** J360HANA !. @0AJBBAT, !etitioner, (s. !@360N7A3 1. JA63 and 010N &. JA63, @es%ondents.

107A6A3N !0@0M, J.) Hacts) Josefina @ealu it CJosefinaE entered into a Joint Venture Agreement with Hrancis 0ric Amaury Biondo CBiondoE, for the o%eration of an ice manufacturing usiness. With Josefina as the industrial %artner and Biondo as the ca%italist %artner. Hor and in consideration of the sum of !#++,+++.++, howe(er, Biondo su seGuently e'ecuted a 1eed of Assignment, transferring all his rights and interests in the usiness in fa(or of res%ondent 0den Jaso C0denE, the wife of res%ondent !rosencio Jaso. The 6%ouses Jaso caused their lawyer to send Josefina a letter a%%rising her of their acGuisition of said Hrenchman2s share in the usiness and formally demanding an accounting and in(entory thereof as well as the remittance of their %ortion of its %rofits. Haulting Josefina with unjustified failure to heed their demand, the 6%ouses Jaso commenced the instant 7om%laint against Josefina and her hus and, for s%ecific %erformance, accounting, e'amination, audit and in(entory of assets and %ro%erties, dissolution of the joint (enture, a%%ointment of a recei(er and damages. Assue) W80T80@ T80 73B@T MA5 3@10@ !0TATA3N0@ SJ360HANA @0AJBBATT A6 !A@TN0@ AN T80 J3ANT V0NTB@0 T3 @0N10@ SATN A773BNTAN& T3 3N0 W83 A6 N3T A !A@TN0@ AN 6AA1 J3ANT V0NTB@0. 8eld) We find the %etition ereft of merit.

&enerally understood to mean an organi:ation formed for some tem%orary %ur%ose, a joint (enture is likened to a %articular %artnershi% or one which Ihas for its o ject determinate things, their use or fruits, or a s%ecific undertaking, or the e'ercise of a %rofession or (ocation.I The rule is settled that joint (entures are go(erned y the law on %artnershi%s which are, in turn, ased on mutual agency or delectus %ersonae. Ansofar as a %artner2s con(eyance of the entirety of his interest in the %artnershi% is concerned, Article *>*/ of the 7i(il 7ode %ro(ides as follows) Art. *>*/. A con(eyance y a %artner of his whole interest in the %artnershi% does not itself dissol(e the %artnershi%, or, as against the other %artners in the a sence of agreement, entitle the assignee, during the continuance of the %artnershi%, to interfere in the management or administration of the %artnershi% usiness or affairs, or to reGuire any information or account of %artnershi% transactions, or to ins%ect the %artnershi% ooks$ ut it merely entitles the assignee to recei(e in accordance with his contracts the %rofits to which the assigning %artners would otherwise e entitled. 8owe(er, in case of fraud in the management of the %artnershi%, the assignee may a(ail himself of the usual remedies. An the case of a dissolution of the %artnershi%, the assignee is entitled to recei(e his assignor2s interest and may reGuire an account from the date only of the last account agreed to y all the %artners. Hrom the foregoing %ro(ision, it is e(ident that ICtEhe transfer y a %artner of his %artnershi% interest does not make the assignee of such interest a %artner of the firm, nor entitle the assignee to interfere in the management of the %artnershi% usiness or to recei(e anything e'ce%t the assignee2s %rofits. The assignment does not %ur%ort to transfer an interest in the %artnershi%, ut only a future contingent right to a %ortion of the ultimate residue as the assignor may ecome entitled to recei(e y (irtue of his %ro%ortionate interest in the ca%ital.I 6ince a %artner2s interest in the %artnershi% includes his share in the %rofits, we find that the 7A committed no re(ersi le error in ruling that the 6%ouses Jaso are entitled to Biondo2s share in the %rofits, des%ite Juanita2s lack of consent to the assignment of said Hrenchman2s interest in the joint (enture. Although 0den did not, moreo(er, ecome a %artner as a conseGuence of the assignment and-or acGuire the right to reGuire an accounting of the %artnershi% usiness, the 7A correctly granted her %rayer for dissolution of the joint (enture conforma ly with the right granted to the %urchaser of a %artner2s interest under Article *>/* of the 7i(il 7ode.

!rimelink !ro%erties ( Ja:atin<Magat F Baldr

F"C S: .n )99:& Primelink Properties and the ;a6atin si(lings entered into a 2oint %enture agreement where(# the ;a6atins shall contri(ute a huge parcel of land and Primelink shall de%elop the same into a su(di%ision. For : #ears howe%er& Primelink failed to de%elop the said land. So in )99<& the ;a6atins filed a complaint to rescind the 2oint %enture agreement with pra#er for preliminar# in2unction. .n said case& Primelink was declared in default or failing to file an answer and for asking multiple motions for extension. he trial court e%entuall# ruled in fa%or of the ;a6atins and it ordered Primelink to return the possession of said land to the ;a6atins as well as some impro%ements which Primelink had so far o%er the propert# without the ;a6atins pa#ing for said impro%ements. his decision was affirmed (# the Court of "ppeals. Primelink is now assailing the order= that turning o%er impro%ements to

the ;a6atins without reim(ursement is un2ust= that the ;a6atins did not ask the properties to (e placed under their possession (ut the# merel# asked for rescission.

.SS>?: 3hether or not the impro%ements made (# Primelink should also (e turned o%er under the possession of the ;a6atins.

4?;': @es. .n the first place& e%en though the ;a6atins did specificall# pra# for possession the same 0placing of impro%ements under their possession1 is incidental in the relief the# pra#ed for. he# are therefore entitled possession o%er the parcel of land plus the impro%ements made thereon made (# Primelink.

.n this 2urisdiction& 2oint %entures are go%erned (# the laws of partnership. >nder the laws of partnership& when a partnership is dissol%ed& as in this case when the trial court rescinded the 2oint %enture agreement& the innocent part# has the right to wind up the partnership affairs.

3ith the rescission of the AB" on account of petitioners fraudulent acts& all authorit# of an# partner to act for the partnership is terminated except so far as ma# (e necessar# to wind up the partnership affairs or to complete transactions (egun (ut not #et finished. Cn dissolution& the partnership is not terminated (ut continues until the winding up of partnership affairs is completed. 3inding up means the administration of the assets of the partnership for the purpose of terminating the (usiness and discharging the o(ligations of the partnership.

.t must (e stressed& too& that although the ;a6atins acDuired possession of the lands and the impro%ements thereon& the said lands and impro%ements remained partnership propert#& su(2ect to the rights and o(ligations of the parties& inter se& of the creditors and of third parties and su(2ect to the outcome of the settlement of the accounts (etween the parties& a(sent an# agreement of the parties in their AB" to the contrar# 0here no agreement in the AB" as to winding up1. >ntil the partnership accounts are determined& it cannot (e ascertained how much an# of the parties is entitled to& if at all.

8eirs of Tan 0ng Uee ( 7A and Benguet Jum er 7o F !at Hacts) The com%laint alleged that after the second World War, Tan 0ng Uee and Tan 0ng Jay, %ooling their resources and industry together, entered into a %artnershi% engaged in the usiness of selling lum er and hardware and construction su%%lies. They named their enter%rise IBenguet Jum erI which they jointly managed until Tan

0ng UeeKs death. !etitioners claimed that Tan 0ng Jay and his children caused the con(ersion of the %artnershi% IBenguet Jum erI into a cor%oration called IBenguet Jum er 7om%any.I !etitioners %rayed for accounting of the %artnershi% assets, and the dissolution, winding u% and liGuidation thereof, and the eGual di(ision of the net assets of Benguet Jum er. The @T7 ruled in fa(or of %etitioners, declaring that Benguet Jum er is a joint (enture which is akin to a %articular %artnershi%. The 7ourt of A%%eals rendered the assailed decision re(ersing the judgment of the trial court. Assue) Whether or not Tan 0ng Uee and Tan 0ng Jay were %artners in Benguet Jum er. 8eld) N3. The trial court determined that Tan 0ng Uee and Tan 0ng Jay had entered into a joint (enture, which it said is akin to a %articular %artnershi%. A %articular %artnershi% is distinguished from a joint ad(enture, to wit) CaE A joint ad(enture Can American conce%t similar to our joint accountsE is a sort of informal %artnershi%, with no firm name and no legal %ersonality. An a joint account, the %artici%ating merchants can transact usiness under their own name, and can e indi(idually lia le therefor. C E Bsually, ut not necessarily a joint ad(enture is limited to a 6AN&J0 T@AN6A7TA3N, although the usiness of %ursuing to a successful termination may continue for a num er of years$ a %artnershi% generally relates to a continuing usiness of (arious transactions of a certain kind. A joint (enture I%resu%%oses generally a %arity of standing etween the joint co<(entures or %artners, in which each %arty has an eGual %ro%rietary interest in the ca%ital or %ro%erty contri uted, and where each %arty e'ercises eGual rights in the conduct of the usiness.IA re(iew of the record %ersuades us that the 7ourt of A%%eals correctly re(ersed the decision of the trial court. The e(idence %resented y %etitioners falls short of the Guantum of %roof reGuired to esta lish a %artnershi%. Bnfortunately for %etitioners, Tan 0ng Uee has %assed away. 3nly he, aside from Tan 0ng Jay, could ha(e e'%ounded on the %recise nature of the usiness relationshi% etween them. An the a sence of e(idence, we cannot acce%t as an esta lished fact that Tan 0ng Uee allegedly contri uted his resources to a common fund for the %ur%ose of esta lishing a %artnershi%. Besides, it is indeed odd, if not unnatural, that des%ite the forty years the %artnershi% was allegedly in e'istence, Tan 0ng Uee ne(er asked for an accounting. The essence of a %artnershi% is that the %artners share in the %rofits and losses. 0ach has the right to demand an accounting as long as the %artnershi% e'ists. A demand for %eriodic accounting is e(idence of a %artnershi%. 1uring his lifetime, Tan 0ng Uee a%%eared ne(er to ha(e made any such demand for accounting from his rother, Tang 0ng Jay. We conclude that Tan 0ng Uee was only an em%loyee, not a %artner. 0(en if the %ayrolls as e(idence were discarded, %etitioners would still

e ack to sGuare one, so to s%eak, since they did not %resent and offer e(idence that would show that Tan 0ng Uee recei(ed amounts of money allegedly re%resenting his share in the %rofits of the enter%rise. There eing no %artnershi%, it follows that there is no dissolution, winding u% or liGuidation to s%eak of. 8ence,the %etition must fail. 6e(illa ( 7A F Jen DOCTRINE: A Aoin) ven)-%e1 in&"-din a ,a%)ne%$!i,1 ,%e$-,,o$e$ ene%a"". a o< $)andin /e)Been )!e Aoin) &o-ven)-%e%$ o% ,a%)ne%$1 in B!i&! ea&! ,a%). !a$ an e>-a" ,%o,%ie)a%. in)e%e$) in )!e &a,i)a" o% ,%o,e%). &on)%i/-)ed and B!e%e ea&! ,a%). e+e%&i$e$ e>-a" %i !)$ in )!e &ond-&) o< )!e /-$ine$$. NATURE: A%%eal y certiorari PONENTE: 6armiento, J. #ACTS: 8. 3n the strength of a contract entered into y and etween Mrs. 6egundina Noguera and the Tourist World 6er(ice, Anc., re%resented y Mr. 0liseo 7anilao, the Tourist World 6er(ice, Anc. leased the %remises elonging to Noguera at Ma ini 6t., Manila for the former2s use as a ranch office. When the ranch office was o%ened, the same was run y the herein a%%ellant Jina 6e(illa. ". The Tourist World 6er(ice, Anc. a%%ears to ha(e een informed that Jina 6e(illa was connected with a ri(al firm, the !hili%%ine Tra(el Bureau, and, since the ranch office was anyhow losing, the Tourist World 6er(ice considered closing down its office. This was firmed u% y two resolutions of the oard of directors of Tourist World 6er(ice, Anc. the first a olishing the office of the manager and (ice<%resident of the Tourist World 6er(ice, Anc., 0rmita Branch, and the second, authori:ing the cor%orate secretary to recei(e the %ro%erties of the Tourist World 6er(ice then located at the said ranch office. To com%ly with the mandate of the Tourist World 6er(ice, the cor%orate secretary &a ino 7anilao went o(er to the ranch office, and, finding the %remises locked, and, eing una le to contact Jina 6e(illa, he %adlocked the %remises on June D, *=." to %rotect the interests of the Tourist World 6er(ice. D. When neither the a%%ellant Jina 6e(illa nor any of her em%loyees could enter the locked %remises, a &om,"ain) Ba$ <i"ed /. )!e !e%ein a,,e""an)$ a ain$) )!e a,,e""ee$ Bi)! a ,%a.e% <o% )!e i$$-an&e o< manda)o%. ,%e"imina%. inA-n&)ion. Bo)! a,,e""ee$ an$Be%ed Bi)! &o-n)e%&"aim$. Hor a%%arent lack of interest of the %arties therein, )!e )%ia" &o-%) o%de%ed )!e di$mi$$a" o< )!e &a$e Bi)!o-) ,%eA-di&e. D. The a%%ellee 6egundina Noguera sought reconsideration of the order dismissing her counterclaim which the court a Guo, in an order dated June

>, *=./, granted %ermitting her to %resent e(idence in su%%ort of her counterclaim. #. A%%ellant Jina 6e(illa refiled her case against the herein a%%ellees and after the issues were joined, the reinstated counterclaim of 6egundina Noguera and the new com%laint of a%%ellant Jina 6e(illa were jointly heard following which the court a Guo ordered oth cases dismiss for lack of merit ISSUES: 6ON )!e%e Ba$ a ,a%)ne%$!i, /e)Been To-%i$) 6o%"d Se%vi&e and Lina Sevi""a HELD: NO RATIO5RULING: 8. The 7ourt is asked to declare the true nature of the relation etween Jina 6e(illa and Tourist World 6er(ice, Anc. The res%ondent 7ourt of see fit to rule on the Guestion, the crucial issue, in its o%inion eing Iwhether or not the %adlocking of the %remises y the Tourist World 6er(ice, Anc. without the knowledge and consent of the a%%ellant Jina 6e(illa entitled the latter to the relief of damages %rayed for and B!e)!e% o% no) )!e eviden&e <o% )!e $aid a,,e""an) $-,,o%)$ )!e &on)en)ion )!a) )!e a,,e""ee To-%i$) 6o%"d Se%vi&e1 In&. -ni"a)e%a"". and Bi)!o-) )!e &on$en) o< )!e a,,e""an) di$&onne&)ed )!e )e"e,!one "ine$ o< )!e E%mi)a /%an&! o<<i&e o< )!e a,,e""ee To-%i$) 6o%"d Se%vi&e1 In&. ". To-%i$) 6o%"d Se%vi&e1 In&.1 in$i$)$1 on )!e o)!e% !and1 )!a) Lina SE7ILLA Ba$ a me%e em,"o.ee1 /ein E/%an&! mana e%E o< i)$ E%mi)a E/%an&!E o<<i&e and )!a) in<e%en)ia"".1 $!e !ad no $a. on )!e "ea$e e+e&-)ed Bi)! )!e ,%iva)e %e$,onden)1 Se -ndina No -e%a. /. T!e ,e)i)ione%$ &on)end1 !oBeve%1 )!a) %e"a)ion /e)Been )!e /e)Been ,a%)ie$ Ba$ one o< Aoin) ven)-%e, ut concede that $whatever might have #een the true relationship #etween %evilla and Tourist &orld %ervice,$ the @ule of Jaw enjoined Tourist World 6er(ice and 7anilao from taking the law into their own hands, in reference to the %adlocking now Guestioned. D. The 7ourt finds the resolution of the issue material, for if, as the %ri(ate res%ondent, Tourist World 6er(ice, Anc., maintains, that the relation etween the %arties was in the character of em%loyer and em%loyee, the courts would ha(e een without jurisdiction to try the case, la or dis%utes eing the e'clusi(e domain of the 7ourt of Andustrial @elations, later, the Bureau 3f Ja or @elations, %ursuant to statutes then in force. #. T!e %e&o%d$ Bi"" $!oB )!a) )!e ,e)i)ione%1 Lina Sevi""a1 Ba$ no) $-/Ae&) )o &on)%o" /. )!e ,%iva)e %e$,onden) To-%i$) 6o%"d Se%vi&e1 In&.1 either as to the result of the enter%rise or as to the means used in connection therewith. a. An the first %lace, under the contract of lease co(ering the Tourist Worlds 0rmita office, she had ound herself in solidum as and for rental %ayments, an arrangement that would e like claims of a master<ser(ant relationshi%. True

the res%ondent 7ourt would later minimi:e her %artici%ation in the lease as one of mere guaranty, that does not make her an em%loyee of Tourist World, since in any case, a true em%loyee cannot e made to %art with his own money in %ursuance of his em%loyerKs usiness, or otherwise, assume any lia ility thereof. An that e(ent, the %arties must e ound y some other relation, ut certainly not em%loyment. . An the second %lace, and as found y the A%%ellate 7ourt, KSwThen the ranch office was o%ened, the same was run y the herein a%%ellant Jina 3. 6e(illa %aya le to Tourist World 6er(ice, Anc. y any airline for any fare rought in on the effort of Mrs. Jina 6e(illa. Bnder these circumstances, it cannot e said that 6e(illa was under the control of Tourist World 6er(ice, Anc. Ias to the means used.I 6e(illa in %ursuing the usiness, o (iously relied on her own gifts and ca%a ilities. .. At is further admitted that Sevi""a Ba$ no) in )!e &om,an.F$ ,a.%o"". #o% !e% e<<o%)$1 $!e %e)ained 0G in &ommi$$ion$ <%om ai%"ine /ookin $1 )!e %emainin DG oin )o To-%i$) 6o%"d. Un"ike an em,"o.ee )!en1 B!o ea%n$ a <i+ed $a"a%. -$-a"".1 $!e ea%ned &om,en$a)ion in <"-&)-a)in amo-n)$ de,endin on !e% /ookin $-&&e$$e$. ;. The fact that 6e(illa had een designated K ranch managerI does not make her Tourist WorldKs em%loyee. As we said, em,"o.men) i$ de)e%mined /. )!e %i !)-o<-&on)%o" )e$) and &e%)ain e&onomi& ,a%ame)e%$. >. In %eAe&)in To-%i$) 6o%"d Se%vi&e1 In&.F$ a% -men)$ !oBeve%1 Be a%e no)1 a$ a &on$e>-en&e1 a&&e,)in Lina Sevi""aF$ oBn1 )!a) i$1 )!a) )!e ,a%)ie$ !ad em/a%ked on a Aoin) ven)-%e o% o)!e%Bi$e1 a ,a%)ne%$!i,. And a,,a%en)".1 Sevi""a !e%$e"< did no) %e&o niCe )!e e+i$)en&e o< $-&! a %e"a)ion. An her letter of No(em er ">, *=.*, she e'%ressly Kconcedes your STourist World 6er(ice, Anc.KsT right to sto% the o%eration of your ranch office in effect, acce%ting Tourist World 6er(ice, Anc.Ks control o(er the manner in which the usiness was run. A Aoin) ven)-%e1 in&"-din a ,a%)ne%$!i,1 ,%e$-,,o$e$ ene%a"". a o< $)andin /e)Been )!e Aoin) &o- ven)-%e%$ o% ,a%)ne%$1 in B!i&! ea&! ,a%). !a$ an e>-a" ,%o,%ie)a%. in)e%e$) in )!e &a,i)a" o% ,%o,e%). &on)%i/-)ed and B!e%e ea&! ,a%). e+e%&i$e$ e>-a" %i !)$ in )!e &ond-&) o< )!e /-$ine$$. =. Hurthermore, )!e ,a%)ie$ did no) !o"d )!em$e"ve$ o-) a$ ,a%)ne%$1 and )!e /-i"din i)$e"< Ba$ em/e""i$!ed Bi)! )!e e"e&)%i& $i n ETo-%i$) 6o%"d Se%vi&e1 In&. in "ie- o< a di$)in&) ,a%)ne%$!i, name. 83. At is the 7ourtKs considered o%inion, B!en )!e ,e)i)ione%1 Lina Sevi""a1 a %eed )o ?Bo@man )!e ,%iva)e %e$,onden)1 To-%i$) 6o%"d Se%vi&e1 In&.F$ E%mi)a o<<i&e1 $!e m-$) !ave done $o ,-%$-an) )o a &on)%a&) o< a en&.. At is the essence of this contract that the agent renders ser(ices Iin re%resentation or on ehalf of another. An the case at ar, 6e(illa solicited airline fares, ut she did so for and on ehalf of her %rinci%al, Tourist World 6er(ice, Anc. As com%ensation,

she recei(ed D, of the %roceeds in the conce%t of commissions. And as we said, 6e(illa herself ased on her letter of No(em er ">, *=.*, %re<assumed her %rinci%alKs authority as owner of the usiness undertaking. 6e a%e &onvin&ed1 &on$ide%in )!e &i%&-m$)an&e$ and <%om )!e %e$,onden) Co-%)F$ %e&i)a" o< <a&)$1 )!a) )!e )ie$ !ad &on)em,"a)ed a ,%in&i,a" a en) %e"a)ion$!i,1 %a)!e% )!an a Aoin) mana amen) o% a ,a%)ne%$!i,. **. But unlike sim%le grants of a %ower of attorney, the agency that we here y declare to e com%ati le with the intent of the %arties, cannot e re(oked at will. The reason is that it is one cou%led with an interest, the agency ha(ing een created for mutual interest, of the agent and the %rinci%al. At a%%ears that Jina 6e(illa is a #ona fide tra(el agent herself, and as such, she had acGuired an interest in the usiness entrusted to her. Moreo(er, she had assumed a %ersonal o ligation for the o%eration thereof, holding herself solidarily lia le for the %ayment of rentals. 6he continued the usiness, using her own name, after Tourist World had sto%%ed further o%erations. 8er interest, o (iously, is not to the commissions she earned as a result of her usiness transactions, ut one that e'tends to the (ery su ject matter of the %ower of management delegated to her. At is an agency that, as we said, cannot e re(oked at the %leasure of the %rinci%al. Accordingly, the re(ocation com%lained of should entitle the %etitioner, Jina 6e(illa, to damages. DISPOSITION: W80@0H3@0, the 1ecision %romulgated on January "/, *=?# as well as the @esolution issued on July /*, *=?#, y the res%ondent 7ourt of A%%eals is here y @0V0@601 and 60T A6A10. The %ri(ate res%ondent, Tourist World 6er(ice, Anc., and 0liseo 7anilao, are 3@10@01 jointly and se(erally to indemnify the %etitioner, Jina 6e(illa, the sum of "#,++.++ as and for moral damages, the sum of !*+,+++.++, as and for e'em%lary damages, and the sum of !#,+++.++, as and for nominal and-or tem%erate damages. 7OTE: A"" &on&-% Bo-%n$ v Ca%man ' Civ

*.

Bourns v. Carman 8 Phil **8 (*+4I))

Facts: )he plaintiff in this action see%s to recover the su' of 7JK8.,4, United tates currenc#, "alance due on a contract for the sawing of lu'"er for the lu'"er #ard of Eo-Chi'-Ei'. )he contract relating to the said wor% was entered into "# the said Eo-Chi'-Ei', acting as in his own

na'e with the plaintiff, and it appears that the said Eo-Chi'-Ei' personall# agreed to pa# for the wor% hi'self. )he plaintiff, however, has "rought this action against Eo-Chi'-Ei' and his codefendants Cointl#, alleging that, at the ti'e the contract was 'ade, the# were the joint proprietors and operators of the said lu'"er #ard engaged in the purchase and sale of lu'"er under the name and style of Eo-Chi'-Ei'. !pparentl# the plaintiff tries to show "# the words a"ove italicized that the other defendants were the partners of Eo-Chi'-Ei' in the said lu'"er-#ard "usiness. )he court dis'issed the action on the ground that the# were not the partners of Eo-Chi'Ei', and rendered Cudg'ent against the other defendants. Issue: @hat is the real legal nature of the participation which the appellants had in Eo-Chi'Ei'1s lu'"er #ard and conse3uentl# their lia"ilit# toward the plaintiffL Held: The partnership is a partnership o cuentas en participation. )hose who contract with the person under whose na'e the "usiness of such partnership of cuentas en participacion is conducted, shall have onl# a right of action against such person and not against the other persons interested, and the latter, on the other hand, shall have no right of action against the third person who contracted with the 'anager unless such 'anager for'all# transfers his right to the'. (Article ! o" the Code o" Commerce.# It follows, therefore that the plaintiff has no right to de'and fro' the appellants the pa#'ent of the a'ount clai'ed in the co'plaint, as Eo-Chi'-Ei' was the onl# one who contracted with hi'. Further'ore, it see's that the alleged partnership "etween Eo-Chi'-Ei' and the appellants was for'ed "# ver"al agree'ent onl#. !t least there is no evidence tending to show that the said agree'ent was reduced to writing, or that it was ever recorded in a pu"lic instru'ent. $oreover, that partnership had no corporate na'e. )he plaintiff hi'self alleges in his co'plaint that the partnership was engaged in "usiness under the na'e and st#le of Eo-Chi'Ei' onl#, which according to the evidence was the na'e of one of the defendants. (n the other hand, it does not appear that there was an# 'utual agree'ent, "etween the parties, and if there were an#, it has not "een shown what the agree'ent was. !s far as the evidence shows it see's that the "usiness was conducted "# Eo-Chi'-Ei' in his own na'e, although he gave to the appellants a share was has "een shown with certaint#. $%he contracts made &ith the plainti"" &ere made 'y Lo(Chim(Lim individually in his o&n name) and there is no evidence that the partnership over contracted in any other "orm*.

Under such circu'stances we find nothing upon which to consider this partnership other than as a partnership of cuentas en participacion. It 'a# "e that, as a 'atter of fact, it is so'ething different, "ut a si'ple "usiness and scant evidence introduced "# the partnership @e see nothing, according to the evidence, "ut a si'ple "usiness conducted "# Eo-Chi'-Ei' exclusivel#, in his own na'e, the na'es of other persons interested in the profits and losses of the "usiness nowhere appearing. ! partnership constituted in such a 'anner, the existence of which was onl# %nown to those who had an interest in the sa'e, "eing no 'utual agree'ents "etween the partners and without a corporate na'e indicating to the pu"lic in so'e wa# that there were other people "esides the one who ostensi"l# 'anaged and conducted the "usiness, is exactl# the accidental partnership of cuentas en participacion defined in article 239 of the Code of Commerce.

1ietrich ( Hreeman < Bianca

G.R. No. L-H2:2 (an-a%. 2I1 8988 GEORGE O. DIETRICH1 %laintiff<a%%ellee, (s. O.*. #REEMAN1 (AMES L. PIERCE1 and BURTON 6HITCOMB1 defendants. BURTON 6HITCOMB1 a%%ellant. #a&)$: 3.U. Hreeman, James J. !ierce, and Burton Whitcom Cas owners and o%erators of the Manila 6team JaundryE filed a com%laint to reco(er the sum of !=#" alleged to e the alance due the %laintiff for ser(ices rendered in fa(or of defendants. T7<Hreeman and Whitcom were ordered to %ay jointly and se(erally, for the sum of !?#", . The com%laint as to !ierce was dismissed, Whitcom alone a%%ealing. ISSUE: W3N the court erred in ordering Hreeman and Whitcom to %ay jointly and se(erally HELD: YES.

At a%%ears from the record that Whitcom ne(er knew the %laintiff, ne(er had anything to do with %ersonally, and that the %laintiffKs contract was with Hreeman, the managing %artner of the laundry. At further a%%ears from the record that !ierce, after he sold his interest in this laundry to Whitcom , continued to look after Whitcom Ks interest y authority of the latter. The %artnershi% entered into y Hreeman and Whitcom show clearly that such %artnershi% was not a commercial one$ hence the %ro(isions of the 7i(il 7ode and not the 7ode of 7ommerce must go(ern in determining the lia ility of the %artners. An 'ourns vs. Carman, the %artnershi% was one of cuentas en participacion. IA %artnershi%,I Guoting from the sylla us in this case, Iconstituted in such a manner that its e'istence was only known to those who had an interest in the same, there eing no mutual agreement etween the %artners, and without a cor%orate name indicating to the %u lic in some way that there were other %eo%le esides the one who ostensi ly managed and conducted the usiness, is e'actly the accidental %artnershi% of cuentas en participacion defined in article "/= of the 7ode of 7ommerce.I An a %artnershi% of cuentas en participacion, under the %ro(isions of article "D" of the 7ode of 7ommerce, those who contract with the %erson in whose name the usiness of such a %artnershi% was conducted shall ha(e only the right of action against such %erson and not against other %ersons interested. 6o this case is easily distinguished from the case at ar, in that the one did not ha(e the cor%orate name while the other was known as the Manila 6team Jaundry. The %laintiff was em%loyed y and %erformed ser(ices for the Manila 6team Jaundry and was not em%loyed y nor did he %erform ser(ices for Hreeman alone. The %u lic did not deal with Hreeman and Whitcom %ersonally, ut with the Manila 6team Jaundry. These two %artners were doing usiness under this name and, as we ha(e said, it was not a commercial %artnershi%. Therefore, y the e'%ress %ro(isions of articles *.=> and **/? of the 7i(il 7ode the %artners are not lia le indi(idually for the entire amount due the %laintiff. The lia ility is %ro rata and in this case the a%%ellant is res%onsi le to the %laintiff for only one<half of the de t.

Hor these reasons the judgment of the court elow is re(ersed and judgment entered in fa(or of the %laintiff and against the defendant Whitcom for the sum of !/?., with interest as fi'ed y the court elow
Bi "an aBa v Con$)an)ino ' Civ

. Bi+lan+a&a v. Constantino
Facts: )he case involves an appeal filed "# respondent-appellant Pastor :. Constantino with the Court of First Instance of Rizal an a'ended co'plaint against petitioners Eucina :iglangawa and Eucia .spiritu where the onl# issue, which is of law is the legalit# of the annotation of lis pendens predicated on his a'ended co'plaint. =efendants Eucina :iglangawa and Eucia .spiritu were or have "een the owners of a parcel of land in $arulas, Polo, :ulacan. :iglangawa, with the consent of her co-owner Eucia .spiritu, appointed plaintiff their exclusive agent to develop the area descri"ed in paragraph < into su"division lots and to sell the' to prospective ho'eownersH and as co'pensation for his services, defendants pro'ised to pa# hi' a co''ission of <4? on the gross sales and a fee of *4? on the collections 'ade "# hi' pa#a"le fro' Mthe first collections received fro' the purchasers in respect to each lot sold. )he power thus conferred "# Eucina :iglangawa to plaintiff was confir'ed in a notarial docu'ent executed on $arch K, *+,4 "# her and her co-defendants, who are hus"and and wife, with the added stipulation that the# could not revo%e the contract of agenc# without plaintiffNs consent. !dvancing all the expenses incurred in the develop'ent and ad'inistration of the proCect, plaintiff caused the su"division of said propert# into <4K lots and advertised the' for sale under the na'e M::: $!RUE! U:=I>I I(F Fo. KNH and up to (cto"er, *+,* plaintiff had disposed of 'ore than half of the entire area at P*4.44 and P*<.44 per s3uare 'eter. !lthough under the express ter's of the contract of ;anuar# *J, *+,4, the co''issions of plaintiff for 'a%ing K8 K those sales and his collection fees of *4? were to "e paid to hi' Mfro' the first collections received fro' the purchasers in respect to each lot soldM, defendants, in contravention of that agree'ent, oppressivel# and in "ad faith adopted the practice of pa#ing the latterNs co'pensation out of K4? onl# of the gross 'onthl# collections fro' the sales, such that, as of (cto"er *,, *+,* when a li3uidation was 'ade, there was still a "alance on plaintiffNs co''issions in the a'ount of PJ9,9++.<4. Eater, in (cto"er, *+,*, defendants wantonl#, oppressivel#, and in evident "ad faith ter'inated the agenc# contracts, depriving plaintiff of his rights to co''ission fees of <4? on the sale of the re'aining lots and *4? fee on the cash receipts of the "usiness ever# 'onth. =efendants nevertheless, expressl# ac%nowledge their lia"ilit# to plaintiff in the su' of PJ9,9++.<4 for unpaid co''issions as of (cto"er *I, *+,*H and the# pro'ised to pa# inde"tedness to plaintiff in successive 'onthl# install'ents "eginning Fove'"er, *+,*.

Plaintiff consented to the settle'ent of the "alance of his co''ission in 'onthl# install'ents after the ter'ination of the agenc# in consideration of defendantNs pro'ises that the# would co'pute and faithfull# pa# the percentage of 'onthl# install'ents on the "asis of their 'onthl# gross collections fro' the operation of M::: $!RUE! U:=I>I I(F Fo. KM, and shall follow that procedure until their total inde"tedness is full# settled. Fro' (cto"er *I, *+,* to $arch K*, *+,K, defendants 'ade a total 'onthl# gross collection of around P,<,9J+.IK fro' the "usiness, and out of these receipts plaintiff was entitled to 'ini'u' pa#'ents of P9,8**.*K pursuant to .xhi"it MCMH "ut again defendant wantonl#, fraudulentl#, oppressivel#, and in evident "ad faith paid plaintiff onl# the su' of PI,<4J.*K or P<,,48.44 short of what plaintiff should have received during the period. Upon gaining infor'ation of the "reach of the contract "# defendants a"out the end of $arch, *+,K and verif#ing the existence of such "reach, plaintiff i''ediatel# de'anded of defendants the difference "etween the a'ounts due to hi' under the contract and those actuall# paid "# the', "ut defendants wantonl#, fraudulentl#, and without cause refused to 'a%e necessar# settle'ent. (n !pril I, *+,,, the Register of =eeds of :ulacan re3uested petitioners to surrender their ownerNs cop# of )ransfer Certificate of )itle Fo. ,J,+ for annotation of said notice of lis pendens, "ut petitioners refused to do so. Dowever, on $a# *8, *+,,, when petitioners registered the a"solute deed of sale in favor of Car'elita E. antos covering so'e of the lots of the su"division, said official without their %nowledge and consent, 'ade the annotation of the lis pendens on petitionersN afore'entioned title, as well as on the title issued to Car'elita E. antos. Petitioners, therefore, on ;une **, *+,,, filed with the Court of First Instance of :ulacan, a petition pra#ing for the cancellation of said notice of lis pendens. )o this petition, respondent filed his answer on ;une *8, *+,,, to which, petitioners filed their repl# on ;une <K, *+,,. (n ;une <J, *+,,, respondent filed a reCoinder to said repl#. Issue: @hether the annotation of lis pendens predicated on the co'plaint of respondentappellant Pastor :. Constantino is legal. Held: !ppellantNs theor# is neither supported "# the allegations of his co'plaint, nor "orne out "# the purpose of his action. )here is no word or expression in the various paragraphs of his a'ended co'plaint that suggests an# idea of partnership. (n the contrar#, appellant expressl# averred that petitioners Mappointed plaintiff (appellant) their exclusive agent to develop the area descri"ed in paragraph < into su"division lots and to sell the' to prospective ho'eownersH and as compensation for his services defendants (appellees) pro'ised to pa# hi' a commission of <4? on the gross sales and a fee of *4? on the collections 'ade "# hi'. Categoricall#, appellant referred to hi'self as an agent, not a partnerH entitled to co'pensation, not participation, in the for' of co''ission or fee, not a share. It is true that in his a'ended co'plaint, appellant clai's to have 'ade advances for the expenses incurred in the develop'ent and ad'inistration of the propert#. :ut again he never considered these as contributions to the "usiness as to 'a%e hi' a partnerH otherwise, he would have so stated it in his co'plaint. In fact, after a li3uidation of these advances and the co''issions due to appellant at the ti'e of the termination o" the a+ency, the whole "alance

was considered as appelleesN inde'tedness which appellant consented to "e settled in 'onthl# instal'ents. @hile it is true again that the pra#er in a co'plaint does not deter'ine the nature of the action, it not "eing a 'aterial part of the cause of action, still it logicall# indicates, as it does in this case, the purpose of the actor. )he four paragraphs of the pra#er see%s the recover# of fixed a'ounts of underpayments and co''issions and feesH not li3uidation or accounting or partition as now insisted upon "# appellant. !ppellantsNs a'ended co'plaint, not "eing Man action affecting the title or the right of possession of real propert#M,* nor one Mto recover possession of real estate, or to 3uiet title thereto, or to re'ove clouds upon the title thereof, or for partition or other proceeding of an# %ind in court affecting the title to real estate or the use or occupation thereof or the "uildings thereon . . .M,< the same cannot 'e the 'asis "or annotatin+ a notice o" lis pendens on the title o" the petitioners(appellees. Daving reached the a"ove conclusion, this Court finds it unnecessar# to decide the incidental 'atters raised "# the parties during the pendenc# of this appeal. @herefore, finding no error in the appealed order of the court a quo, the sa'e is here"# affir'ed, with costs against the respondent-appellant. o ordered.

Ona v$. CIR H) An *=DD Joren:o 3na was a%%ointed administrator of the estate of his late wife Julia Bunales. The administrator su mitted the %roject of %artition, which was a%%ro(ed y the court. 8owe(er, there was no attem%t was made to di(ide the %ro%erties among his # children. Anstead, the %ro%erties remained under the management of Joren:o who used the said %ro%erties in usiness y leasing or selling them and in(esting the income deri(ed therefrom. An the years *=DD to *=#D, res%ondent 7A@ did treat %etitioners as co<owners, not lia le to cor%orate ta', and it was only from *=## that 7A@ considered them as ha(ing formed an unregistered %artnershi%. A) W-N an unregistered %artnershi% was formed. 8) < 5es. At is admitted that all %rofits from these (entures were di(ided among %etitioners %ro%ortionately in accordance with their res%ecti(e shares in the inheritance. N Hrom the moment %etitioners allowed not only the incomes from their res%ecti(e shares ut e(en the %ro%erties themsel(es to e used y Joren:o as a common fund in undertaking se(eral transactions or usiness, with the intention of deri(ing %rofit to e shared y them %ro%ortionately, such act was tantamount to actually contri uting such incomes to a common fund and, in effect they there y formed an unregistered %artnershi% ta'a le y law. Re.e$ v$. CIR H) !etitioners %urchased a lot and uilding. The initial %ayment was shared eGually y the res%ondents. At the time of the %urchase, the uilding was leased to (arious

tenants, whose rights under the lease contracts with the original owners, the %urchasers, %etitioners herein, agreed to res%ect. The administration of the uilding was entrusted to an administrator who collected the rents$ ke%t ooks and records and rendered statement of accounts to the owners. !etitioners di(ided eGually the income of o%eration and maintenance. The 7TA held that %etitioners formed a %artnershi% ta'a le y law a%%lying the ruling in 0(angelista case. A) W-N %etitioners indeed formed a %artnershi% as contem%lated y law. 8) N 5es. The essential elements of %artnershi%s are %resent in this case, namely$ CaE an agreement to contri ute money, %ro%erty, or industry to a common fund$ and C E intent to di(ide the %rofits among the contracting %arties. N The first was already admitted and therefore it oils down to their intent in acting as they did. N B%on consideration of the circumstances surrounding the case, it was found out that the %etitioner2s %ur%ose was to engage in real estate transactions for monetary gain and then di(ide the same among themsel(es. N An the case at ar, there was a common fund used in a series of transactions$ the %ro%erty thus acGuired was not used for residential or other %ur%oses other than leasing. 6uch %ro%erties ha(ing een under management y one %erson with full %ower to lease and such condition e'isted for *+ years already. N The collecti(e effect of these circumstances is such as to lea(e no room for dou t on the e'istence of said intent in the %etitioners herein. Sa%dane v$. CA H) !etitioner ad(anced the theory that he is a %artner of %ri(ate res%ondent and not a mere em%loyee inde ted to the latter. !etitioner2s ases are the %romissory notes e'ecuted y %ri(ate res%ondent in fa(or of %etitioner as allegedly his share or contri ution for the %artnershi%. A) W-N there e'ists a %artnershi% etween %etitioner and %ri(ate res%ondent. 8) No. While recei%t of a share in the %rofits of the usiness is a %rima facie e(idence that the %erson is recei(ing the same as a %artner, no inference shall e drawn if such %rofits were recei(ed in %ayment of his wages as an em%loyee. O/i""o$ v$. CIR C!rofit merely incidentalE H) This case is a out the income ta' lia ility of four rothers and sisters who sold two %arcels of land which they had acGuired from their father. Commi$$ione% o< In)e%na" Reven-e %e>-i%ed )!e <o-% ,e)i)ione%$ )o ,a. corporate income tax on the total %rofit of !*/D,//. in addition to indi(idual income ta' on their shares thereof 8e assessed !/?,+*> as cor%orate income ta', !*>,#+= as #+, fraud surcharge and !*#,#D?.#. as D", accumulated interest, or a total of P(),*(+.,-. The 7ommissioner acted on the theory that the four %etitioners had formed an unregistered %artnershi% or joint (enture within the meaning of sections "DCaE and >DC E of the Ta' 7odeT A) W-N an unregistered %artnershi% was formed. 8) N No. Their original %ur%ose was to di(ide the lots for residential %ur%oses. Af later on they found it not feasi le to uild their residences on the lots ecause of the high

cost of construction, then they had no choice ut to resell the same to dissol(e the co<ownershi%. N The di(ision of the %rofit was merely incidental to the dissolution of the co< ownershi% which was in the nature of things a tem%orary state. At had to e terminated sooner or later. N Article *?.=C/E of the 7i(il 7ode %ro(ides that Ithe sharing of gross returns does not of itself esta lish a %artnershi%, whether or not the %ersons sharing them ha(e a joint or common right or interest in any %ro%erty from which the returns are deri(edI. T!e%e m-$) /e an -nmi$)aka/"e in)en)ion )o <o%m a ,a%)ne%$!i, o% Aoin) ven)-%e.
Li)onA-a (%. v$. Li)onA-a S%.1 e) a". #ACTS: Aurelio and 0duardo are rothers. An *=?/, Aurelio alleged that 0duardo entered into a contract of %artnershi% with him. Aurelio showed as e(idence a letter sent to him y 0duardo that the latter is allowing Aurelio to manage their family usiness Cif 0duardo2s awayE and in e'change thereof he will e gi(ing Aurelio !* million or *+, eGuity, whiche(er is higher. A memorandum was su seGuently made for the said %artnershi% agreement. The memorandum this time stated that in e'change of Aurelio, who just got married, retaining his share in the family usiness Cmo(ie theaters, shi%%ing and land de(elo%mentE and some other immo(a le %ro%erties, he will e gi(en !* Million or *+, eGuity in all these usinesses and those to e su seGuently acGuired y them whiche(er is greater. An *==", howe(er, the relationshi% etween the rothers turned sour. And so Aurelio demanded an accounting and the liGuidation of his share in the %artnershi%. 0duardo did not heed which led to AurelioKs filing a suit against his rother 0duardo for s%ecific %erformance and accounting. ISSUE: Whether or not there e'ists a %artnershi% etween the %arties. HELD: NO. The %artnershi% is (oid and legally none'istent. The documentary e(idence %resented y Aurelio, i.e. the letter from 0duardo and the Memorandum, did not %ro(e %artnershi%. The *=?/ letter from 0duardo on its face, contains ty%ewritten entries, %ersonal in tone, ut is unsigned and undated. As an unsigned document, there can e no Gui ling that said letter does not meet the %u lic instrumentation reGuirements e'acted under Article *??* Chow %artnershi% is constitutedE of the 7i(il 7ode. Moreo(er, #eing unsigned and dou#tless referring to a partnership involving more than P.,***.** in mone! or propert!, said letter cannot #e presented for notari ation, let alone registered with the %ecurities and /0change Commission (%/C), as called for under the Article *??" Cca%itali:ation of a %artnershi%E of the 7ode. And inasmuch as the in(entory reGuirement under the succeeding Article *??/ goes into the matter of (alidity when immo(a le %ro%erty is contri uted to the %artnershi%, the ne't logical %oint of inGuiry turns on the nature of Aurelio2s contri ution, if any, to the su%%osed %artnershi%. The Memorandum is also not a %roof of the %artnershi% for the same is not a %u lic instrument and again, no in(entory was made of the immo(a le %ro%erty and no in(entory was attached to the Memorandum. Article *??/ of the 7i(il 7ode reGuires that if immo(a le %ro%erty is contri uted to the %artnershi% an in(entory shall e had and attached to the contract. A com%laint for deli(ery and accounting of %artnershi% %ro%erty ased on such (oid or legally non<e'istent actiona le document is dismissi le for failure to state of action. W80@0H3@0, the instant %etition was 10NA01

A -i"a (% v CA ' *%i$ Hacts) An A%ril *==*, the s%ouses @u en and Helicidad A rogar entered into a loan agreement with a lending firm called A.7. Aguila 4 6ons, 7o., a %artnershi%. The loan was for !"++k. To secure the loan, the s%ouses mortgaged their house and lot located in a su di(ision. The terms of the loan further sti%ulates that in case of non< %ayment, the %ro%erty shall e automatically a%%ro%riated to the %artnershi% and a deed of sale e readily e'ecuted in fa(or of the %artnershi%. 6he does ha(e a =+<day redem%tion %eriod. @u en died, and Helicidad failed to make %ayment. 6he refused to turn o(er the %ro%erty and so the firm filed an ejectment case against her Cwherein she lostE. 6he also failed to redeem the %ro%erty within the %eriod sti%ulated. 6he then filed a ci(il case against Alfredo Aguila, manager of the firm, seeking for the declaration of nullity of the deed of sale. The @T7 retained the (alidity of the deed of sale. The 7ourt of A%%eals re(ersed the @T7. The 7A ruled that the sale is (oid for it is a %actum commissorium sale which is %rohi ited under Art. "+>> of the 7i(il 7ode Cnote the dis%arity of the %urchase %rice, which is the loan amount, with the actual (alue of the %ro%erty which is after all located in a su di(isionE. Assue) Whether or not the case filed y Helicidad shall %ros%er. 8eld) No. Bnfortunately, the ci(il case was filed not against the real %arty in interest. As %ointed out y Aguila, he is not the real %arty in interest ut rather it was the %artnershi% A.7. Aguila 4 6ons, 7o. The @ules of 7ourt %ro(ide that 9e(ery action must e %rosecuted and defended in the name of the real %arty in interest.; A real %arty in interest is one who would e enefited or injured y the judgment, or who is entitled to the a(ails of the suit. Any decision rendered against a %erson who is not a real %arty in interest in the case cannot e e'ecuted. 8ence, a com%laint filed against such a %erson should e dismissed for failure to state a cause of action, as in the case at ar. Bnder Art. *?.> of the 7i(il 7ode, a %artnershi% 9has a juridical %ersonality se%arate and distinct from that of each of the %artners.; The %artners cannot e held lia le for the o ligations of the %artnershi% unless it is shown that the legal fiction of a different juridical %ersonality is eing used for fraudulent, unfair, or illegal %ur%oses. An this case, Helicidad has not shown that A.7. Aguila 4 6ons, 7o., as a se%arate juridical entity, is eing used for fraudulent, unfair, or illegal %ur%oses. Moreo(er, the title to the su ject %ro%erty is in the name of A.7. Aguila 4 6ons, 7o. At is the %artnershi%, not its officers or agents, which should e im%leaded in any litigation in(ol(ing

%ro%erty registered in its name. A (iolation of this rule will result in the dismissal of the com%laint.

6unga ( 7hua F 7ary Cinclude the discussion on if ca%ital at least !/+++E &.@. No. *D//D+ August *#, "++* JAJAB0T8 6BN&A<78AN and 707AJAA 6BN&A, %etitioners, (s. JAMB0@T3 T. 78BA, res%ondent. &3NMA&A<@0506, J.) Hacts) Jam erto T. 7hua filed a com%laint against Jili eth 6unga 7han and 7ecilia 6unga, daughter and wife, res%ecti(ely of the deceased Jacinto J. 6unga, for IWinding B% of !artnershi% Affairs, Accounting, A%%raisal and @eco(ery of 6hares and 1amages with Writ of !reliminary AttachmentI with the @egional Trial 7ourt. @es%ondent alleged that he (er ally entered into a %artnershi% with Jacinto in the distri ution of 6hellane JiGuefied !etroleum &as in Manila. Hor usiness con(enience, res%ondent and Jacinto allegedly agreed to register the usiness name of their %artnershi%, 680JJAT0 &A6 A!!JAAN70 70NT0@, under the name of Jacinto as a sole %ro%rietorshi%. @es%ondent allegedly deli(ered his initial ca%ital contri ution of !*++,+++.++ to Jacinto while the latter in turn %roduced !*++,+++.++ as his counter%art contri ution, with the intention that the %rofits would e eGually di(ided etween them. B%on JacintoKs death, his sur(i(ing wife, %etitioner 7ecilia and %articularly his daughter, %etitioner Jili eth, took o(er the o%erations, control, custody, dis%osition and management of 6hellite without res%ondentKs consent. 1es%ite res%ondentKs re%eated demands u%on %etitioners for accounting, in(entory, a%%raisal, winding u% and restitution of his net shares in the %artnershi%, %etitioners failed to com%ly. !etitioners Guestion the correctness of the finding of the trial court and the 7ourt of A%%eals that a %artnershi% e'isted etween res%ondent and Jacinto from *=?? until JacintoKs death. An the a sence of any written document to show such %artnershi% etween res%ondent and Jacinto, %etitioners argues that these courts were %roscri es from hearing the testimonies of res%ondent and his witness, Jose%hine, to %ro(e the alleged %artnershi% three years after JacintoKs death. To su%%ort this

argument, %etitioners in(oke the I1ead ManKs 6tatuteK or I6ur(i(orshi% @uleI under 6ection "/, @ule */+ of the @ules of 7ourt. !etitioners thus im%lore this 7ourt to rule that the testimonies of res%ondent and his alter ego, Jose%hine, should not ha(e een admitted to %ro(e certain claims against a deceased %erson CJacintoE, now re%resented y %etitioners. Assue) Whether a %artnershi% was formed. 8eld) 6e a%e no) ,e%$-aded. A %artnershi% may e constituted in any form, e'ce%t where immo(a le %ro%erty of real rights are contri uted thereto, in which case a %u lic instrument shall necessary. 8ence, ased on the intention of the %arties, as gathered from the facts and ascertained from their language and conduct, a (er al contract of %artnershi% may arise. The essential %rofits that must e %ro(en to that a %artnershi% was agreed u%on are C*E mutual contri ution to a common stock, and C"E a joint interest in the %rofits. Bnderstanda ly so, in (iew of the a sence of the written contract of %artnershi% etween res%ondent and Jacinto, res%ondent resorted to the introduction of documentary and testimonial e(idence to %ro(e said %artnershi%. The crucial issue to settle then is to whether or not the I1ead ManKs 6tatuteI a%%lies to this case so as to render inadmissi le res%ondentKs testimony and that of his witness, Jose%hine. Two reasons forestall the a%%lication of the I1ead ManKs 6tatuteI to this case Hirst, %etitioners filed a com%ulsory counterclaim against res%ondents in their answer efore the trial court, and with the filing of their counterclaim, %etitioners themsel(es effecti(ely remo(ed this case from the am it of the I1ead ManKs 6tatuteI. Well entrenched is the rule that when it is the e'ecutor or administrator or re%resentati(es of the estates that sets u% the counterclaim, the %laintiff, herein res%ondent, may testify to occurrences efore the death of the deceased to defeat the counterclaim. Moreo(er, as defendant in the counterclaim, res%ondent is not disGualified from testifying as to matters of facts occurring efore the death of the deceased, said action not ha(ing een rought against ut y the estate or re%resentati(es of the deceased. 6econd, the testimony of Jose%hine is not co(ered y the I1ead ManKs 6tatuteI for the sim%le reason that she is not Ia %arty or assignor of a %arty to a case or %ersons in whose ehalf a case is %rosecuted.I @ecords show that res%ondent offered the testimony of Jose%hine to esta lish the e'istence of the %artnershi% etween

res%ondent and Jacinto. !etitionersK insistence that Jose%hine is the alter ego of res%ondent does not make her an assignor ecause the term IassignorI of a %arty means Iassignor of a cause of action which has arisen, and not the assignor of a right assigned efore any cause of action has arisen.I !lainly then, Jose%hine is merely a witness of res%ondent, the latter eing the %arty %laintiff. !etitionersK reliance alone on the I1ead ManKs 6tatuteI to defeat res%ondentKs claim cannot %re(ail o(er the factual findings of the trial court and the 7ourt of A%%eals that a %artnershi% was esta lished etween res%ondent and Jacinto. Based not only on the testimonial e(idence, ut the documentary e(idence as well, the trial court and the 7ourt of A%%eals considered the e(idence for res%ondent as sufficient to %ro(e the formation of %artnershi%, al eit an informal one. An a des%erate id to cast dou t on the (alidity of the oral %artnershi% etween res%ondent and Jacinto, %etitioners maintain that said %artnershi% that had initial ca%ital of !"++,+++.++ should ha(e een registered with the 6ecurities and 0'change 7ommission C607E since registration is mandated y the 7i(il 7ode, True, Article *??" of the 7i(il 7ode reGuires that %artnershi%s with a ca%ital of !/,+++.++ or more must register with the 607, howe(er, this registration reGuirement is not mandatory. Article *?.> of the 7i(il 7ode e'%licitly %ro(ides that the %artnershi% retains its juridical %ersonality e(en if it fails to register. The failure to register the contract of %artnershi% does not in(alidate the same as among the %artners, so long as the contract has the essential reGuisites, ecause the main %ur%ose of registration is to gi(e notice to third %arties, and it can e assumed that the mem ers themsel(es knew of the contents of their contract. An the case at ar, non<com%liance with this directory %ro(ision of the law will not in(alidate the %artnershi% considering that the totality of the e(idence %ro(es that res%ondent and Jacinto indeed forged the %artnershi% in Guestion.

Cam,o$ R-eda 4 Co v Pa&i<i& Comme%&ia" ?00 P!i" 98H@ Hacts) 7am%os, @ueda 4 7o., a limited %artnershi%, is inde ted to the a%%ellants) !acific 7ommercial 7o. , Asiatic !etroleum 7o, and Anternational Banking 7or%oration amounting to not less than !*,+++.++ Cwhich were not %aid more than /+ days %rior to the date of the filing y %etitioners of the a%%lication for (oluntary insol(encyE. The trial court denied their %etition on the ground that it was not %ro(en, nor alleged, that the mem ers of the firm were insol(ent at the time the a%%lication was filed. At also held that the %artners are %ersonally and solidarily lia le for the conseGuences of the transactions of the %artnershi%.

Assue) Whether or not a limited %artnershi% may e held to ha(e committed an act of insol(ency. 8eld) 5es. A limited %artnershi%2s juridical %ersonality is different from the %ersonality of its mem ers. 3n general %rinci%le, the limited %artnershi% must answer for and suffer the conseGuence of its acts. Bnder our Ansol(ency Jaw, one of the acts of ankru%tcy u%on w-c an adjudication of in(oluntary insol(ency can e %redicated is the failure to %ay o ligations. The failure of 7am%os, @ueda 4 7o., to %ay its o ligations constitutes an act w-c is s%ecifically %ro(ided for in the Ansol(ency Jaw for declaration of in(oluntary insol(ency. The %etitioners ha(e a right to a judicial decree declaring the in(oluntary insol(ency of said %artnershi%. 7JA6606 AN1 UAN16 3H !A@TN0@68A! CIR v S-)e% F !at HA7T6) A limited %artnershi% named William J. 6uter KMorcoinK 7o., Jtd was formed /+6e%tem er *=D? y William J. 6uter as the general %artner, and Julia 6%irig and &usta( 7arlson. They contri uted, res%ecti(ely, !"+,+++.++, !*>,+++.++ and!",+++.++. it was also duly registered with the 607. 3n *=D> 6uter and 6%irig got married and in effect 7arlson sold his share to the cou%le, the same was also registered with the 607. The limited %artnershi% had een filing its income ta' returns as a cor%oration, without o jection y the herein %etitioner, 7ommissioner of Anternal @e(enue, until in *=#= when the latter, in an assessment, consolidated the income of the firm and the indi(idual incomes of the %artners<s%ouses 6uter and 6%irig resulting in a determination of a deficiency income ta' against res%ondent 6uter in the amount of !",.?>.+. for *=#D and !D,#.?.++ for *=##. A66B0)Whether or not the limited %artnershi% has een dissol(ed after the marriage of 6uter and 6%irig and uying the interest of limited %artner 7arlson. @BJAN&) No, the limited %artnershi% was not dissol(ed. 9A hus and and a wife may not enter into a contract of general co%artnershi%, ecause under the 7i(il 7ode, which a%%lies in the a sence of e'%ress %ro(ision in the 7ode of 7ommerce, %ersons %rohi ited from making donations to each other are %rohi ited from entering into uni(ersal %artnershi%s. C"0cha(erri *=.E At follows that the marriage of %artners necessarily rings a out the dissolution of a %re<e'isting %artnershi%. 9What the law %rohi its was when the s%ouses entered into a general %artnershi%. An the case at ar, the %artnershi% was limited.

< Tan ( 1el @osario F Jen DOCTRINE: ?$ee no)e$ /e"oB@ NATURE) 7onsolidated case. Two s%ecial ci(il actions for %rohi ition PONENTE) Vitug, J. #ACTS: V This is a consolidated case in(ol(ing the constitutionality of @A ?D=. or the Sim,"i<ied Ne) In&ome Ta+a)ion C6NATE scheme. V !etitioners claim to e ta'%ayers ad(ersely affected y the continued im%lementation of the 6NAT. V In )!e 8$) &a$e1 they contended that the 8ouse Bill which e(entually ecame @A ?D=. is a misnomer or deficient ecause it was named as 96im%lified Net Ancome Ta'ation 6cheme for the 6elf<0m%loyed and !rofessionals 0ngaged in the !ractice of their !rofession; while the actual title contains the said words with the additional %hrase, 9WAmending 6ection "* and "= of the National Anternal @e(enue 7ode.; V They alleged that this title was in direct (iolation of 6ection ". C*E and "> C*E in Article VA of the *=>? 7onstitution. The %etitioner also stressed that it (iolates the eGual %rotection clause as it only im%osed ta'es u%on one who %ractice his %rofession alone and not to those who are engaged to single %ro%rietorshi%. V In )!e 2nd &a$e1 they argued that %e$,onden)$ !ave e+&eeded )!ei% %-"e- makin a-)!o%i). in a,,".in SNIT )o ene%a" ,%o<e$$iona" ,a%)ne%$!i,$ y issuing @e(enue @egulation "<=/ to carry out the @A. This is anchored on the administrati(e inter%retation of %u lic res%ondents that would a%%ly 6NAT to%artners in general %rofessional %artnershi%s.< V !etitioners cited the deli erations in the 83@ regarding the im%lementation of the said rule in which it was shown that framers did not intend for the ill to e a%%lica le to usiness cor%orations or %artnershi%s ISSUE: *. W3N @A ?D=. is unconstitutional C&.@. No. *+=">=E. NO 2. 6ON in RA ;09H1 )!e SNIT a,,"ie$ )o ,a%)ne%$ in ene%a" ,%o<e$$iona" ,a%)ne%$!i,$. ?G.R. No. 83900H@. YES HELD: *. 7onstitutionality of @A ?D=. o The 67 ruled in the negati(e. The said law is not ar itrary$ it is germane to the %ur%ose of the law and$ a%%lies to all things of eGual conditions and of same class. o At is neither (iolati(e of eGual %rotection clause due to the e'istence of su stantial difference etween one who %ractice his %rofession alone and one who is engaged to %ro%rietorshi%. o Hurther, the 67 said that @A ?D=. is just an amendatory %ro(ision of the code of ta'%ayers where it classifies ta'%ayers in to four main grou%s) Andi(iduals, 7or%orations, 0state under Judicial 6ettlement and Arre(oca le Trust.

o The court would ha(e a%%reciated the contention of the %etitioner if @A ?D=. was an inde%endent law. But since it is attached to a law that has already classified ta'%ayers, there is no (iolation of eGual %rotection clause. 2. A,,"i&a)ion o< SNIT )o ,a%)ne%$ in ene%a" ,%o<e$$iona" ,a%)ne%$!i,$ o There is no distinction in income ta' lia ility etween a %erson who %ractices his %rofession alone or indi(idually and one who does it through a %artnershi% Cwhether registered or notE with others in the e'ercise of a common %rofession. o Bnder the %resent income ta' system, all indi(iduals deri(ing income from any source whatsoe(er are treated in almost in(aria ly the same manner and under a common set of rules. o Although the general %rofessional %artnershi% is e'em%t from the %ayment of ta'es C ut it still has an o ligation to file an income ta' return mainly for administration and dataE, the %artners themsel(es are lia le for the %ayment of income ta' in their indi(idual ca%acity com%uted on their res%ecti(e and distri uti(e shares of %rofits. NOTES: 1ifferences etween general %rofessional %artnershi%s and ordinary usiness %artnershi%s) a. A ene%a" ,%o<e$$iona" ,a%)ne%$!i,8, unlike an o%dina%. /-$ine$$ ,a%)ne%$!i, ?B!i&! i$ )%ea)ed a$ a &o%,o%a)ion <o% in&ome )a+ ,-%,o$e$ and $o $-/Ae&) )o )!e &o%,o%a)e in&ome )a+E, is not itself an income ta'%ayer. T!e in&ome )a+ i$ im,o$ed no) on )!e ,%o<e$$iona" ,a%)ne%$!i,1 B!i&! i$ )a+ e+em,)1 /-) on )!e ,a%)ne%$ )!em$e"ve$ in )!ei% individ-a" &a,a&i). com%uted on their distri uti(e shares of %artnershi% %rofits. . 3rdinary usiness %artnershi%s, no matter how created or organi:ed, are J)a+a/"e ,a%)ne%$!i,$.; &eneral %rofessional %artnershi%s are 9e+em,) ,a%)ne%$!i,$.; Bnder the Ta' 7ode on income ta'ation, the general %rofessional %artnershi% is deemed to e no more than a mere mechanism or a flow< through entity in the generation of income y, and the ultimate distri ution of such income to, res%ecti(ely, each of the indi(idual %artners. DISPOSITI7E: W80@0H3@0, the %etitions are 1A6MA6601. No s%ecial %ronouncement on costs. 7OTING: 1arvasa, C.J., Cru , 2eliciano, 3egalado, Davide, Jr., 3omero, 'ellosillo, 4elo, 5uiason, Puno, Kapunan and 4endo a, JJ., concur. Padilla and 'idin, JJ., are on lea(e. O%)e a v CA ' Civ

. ,re+orio Orte+a v. CA
A.R. Fo. *4+<J9 ;ul# K, *++, >itug, ;. Facts:

(rtega, then a senior partner in the law fir' :ito, $isa, and Eozada withdrew in said fir'. De filed with .C a petition for dissolution and li3uidation of partnership. .C en "anc ruled that withdrawal of $isa fro' the fir' had dissolved the partnership. !ccordingl#, since it is partnership at will, the law fir' could "e dissolved "# an# partner at an#ti'e, such as "# withdrawal therefro', regardless of good faith or "ad faith, since no partner can "e forced to continue in the partnership against his will. Issue: *. @(F the partnership of :ito, $isa O Eozada (now :ito, Eozada, (rtega O Castillo)is a partnership at willH <. @(F the withdrawal of $isa dissolved the partnership regardless of his good or "ad faithH Held: C held that it was a partnership at will as it had not fixed a specified period for its underta%ing. It 'a# "e dissolved at will "# an# of the partners "ut if it was done in "ad faith, such partner shall "e lia"le for da'ages. Upon dissolution, the partnership continues and its legal personalit# is retained until the co'plete winding up of its "usiness cul'inating in its ter'ination. )he li3uidation of assets is governed "# the CC "ut an agree'ent "etween parties is "inding upon the'. It was not done out of "ad faith as it was spurred "# an interpersonal conflict a'ong the partners. Further'ore, the "irth and life of a partnership at will is predicated on the 'utual desire and consent of the partners.)hrough the doctrine of delectus personae, all the partners have the power, though not necessaril# the right, to dissolve the partnership. )hus, an# of the partners 'a# dissolve the partnership at will at his sole pleasureH "ut he 'ust do so in good faith or he will "e lia"le for da'ages.

UAN16 3H !A@TN0@6 7@0ATA3N AN1 1B@ATA3N < Tocao ( 7A F jen < 6unga ( 7hua F 7ary &.@. No. *D//D+ August *#, "++* JAJAB0T8 6BN&A<78AN and 707AJAA 6BN&A, %etitioners,

(s. JAMB0@T3 T. 78BA, res%ondent. &3NMA&A<@0506, J.) Hacts) Jam erto T. 7hua filed a com%laint against Jili eth 6unga 7han and 7ecilia 6unga, daughter and wife, res%ecti(ely of the deceased Jacinto J. 6unga, for IWinding B% of !artnershi% Affairs, Accounting, A%%raisal and @eco(ery of 6hares and 1amages with Writ of !reliminary AttachmentI with the @egional Trial 7ourt. @es%ondent alleged that he (er ally entered into a %artnershi% with Jacinto in the distri ution of 6hellane JiGuefied !etroleum &as in Manila. Hor usiness con(enience, res%ondent and Jacinto allegedly agreed to register the usiness name of their %artnershi%, 680JJAT0 &A6 A!!JAAN70 70NT0@, under the name of Jacinto as a sole %ro%rietorshi%. @es%ondent allegedly deli(ered his initial ca%ital contri ution of !*++,+++.++ to Jacinto while the latter in turn %roduced !*++,+++.++ as his counter%art contri ution, with the intention that the %rofits would e eGually di(ided etween them. B%on JacintoKs death, his sur(i(ing wife, %etitioner 7ecilia and %articularly his daughter, %etitioner Jili eth, took o(er the o%erations, control, custody, dis%osition and management of 6hellite without res%ondentKs consent. 1es%ite res%ondentKs re%eated demands u%on %etitioners for accounting, in(entory, a%%raisal, winding u% and restitution of his net shares in the %artnershi%, %etitioners failed to com%ly. !etitioners Guestion the correctness of the finding of the trial court and the 7ourt of A%%eals that a %artnershi% e'isted etween res%ondent and Jacinto from *=?? until JacintoKs death. An the a sence of any written document to show such %artnershi% etween res%ondent and Jacinto, %etitioners argues that these courts were %roscri es from hearing the testimonies of res%ondent and his witness, Jose%hine, to %ro(e the alleged %artnershi% three years after JacintoKs death. To su%%ort this argument, %etitioners in(oke the I1ead ManKs 6tatuteK or I6ur(i(orshi% @uleI under 6ection "/, @ule */+ of the @ules of 7ourt. !etitioners thus im%lore this 7ourt to rule that the testimonies of res%ondent and his alter ego, Jose%hine, should not ha(e een admitted to %ro(e certain claims against a deceased %erson CJacintoE, now re%resented y %etitioners.

Assue) Whether there a %artnershi% was formed. 8eld) We are not %ersuaded. A %artnershi% may e constituted in any form, e'ce%t where immo(a le %ro%erty of real rights are contri uted thereto, in which case a %u lic instrument shall necessary. 8ence, ased on the intention of the %arties, as gathered from the facts and ascertained from their language and conduct, a (er al contract of %artnershi% may arise. The essential %rofits that must e %ro(en to that a %artnershi% was agreed u%on are C*E mutual contri ution to a common stock, and C"E a joint interest in the %rofits. Bnderstanda ly so, in (iew of the a sence of the written contract of %artnershi% etween res%ondent and Jacinto, res%ondent resorted to the introduction of documentary and testimonial e(idence to %ro(e said %artnershi%. The crucial issue to settle then is to whether or not the I1ead ManKs 6tatuteI a%%lies to this case so as to render inadmissi le res%ondentKs testimony and that of his witness, Jose%hine. Two reasons forestall the a%%lication of the I1ead ManKs 6tatuteI to this case. Hirst, %etitioners filed a com%ulsory counterclaim against res%ondents in their answer efore the trial court, and with the filing of their counterclaim, %etitioners themsel(es effecti(ely remo(ed this case from the am it of the I1ead ManKs 6tatuteI. Well entrenched is the rule that when it is the e'ecutor or administrator or re%resentati(es of the estates that sets u% the counterclaim, the %laintiff, herein res%ondent, may testify to occurrences efore the death of the deceased to defeat the counterclaim. Moreo(er, as defendant in the counterclaim, res%ondent is not disGualified from testifying as to matters of facts occurring efore the death of the deceased, said action not ha(ing een rought against ut y the estate or re%resentati(es of the deceased. 6econd, the testimony of Jose%hine is not co(ered y the I1ead ManKs 6tatuteI for the sim%le reason that she is not Ia %arty or assignor of a %arty to a case or %ersons in whose ehalf a case is %rosecuted.I @ecords show that res%ondent offered the testimony of Jose%hine to esta lish the e'istence of the %artnershi% etween

res%ondent and Jacinto. !etitionersK insistence that Jose%hine is the alter ego of res%ondent does not make her an assignor ecause the term IassignorI of a %arty means Iassignor of a cause of action which has arisen, and not the assignor of a right assigned efore any cause of action has arisen.I !lainly then, Jose%hine is merely a witness of res%ondent, the latter eing the %arty %laintiff. !etitionersK reliance alone on the I1ead ManKs 6tatuteI to defeat res%ondentKs claim cannot %re(ail o(er the factual findings of the trial court and the 7ourt of A%%eals that a %artnershi% was esta lished etween res%ondent and Jacinto. Based not only on the testimonial e(idence, ut the documentary e(idence as well, the trial court and the 7ourt of A%%eals considered the e(idence for res%ondent as sufficient to %ro(e the formation of %artnershi%, al eit an informal one. An a des%erate id to cast dou t on the (alidity of the oral %artnershi% etween res%ondent and Jacinto, %etitioners maintain that said %artnershi% that had initial ca%ital of !"++,+++.++ should ha(e een registered with the 6ecurities and 0'change 7ommission C607E since registration is mandated y the 7i(il 7ode, True, Article *??" of the 7i(il 7ode reGuires that %artnershi%s with a ca%ital of !/,+++.++ or more must register with the 607, howe(er, this registration reGuirement is not mandatory. Article *?.> of the 7i(il 7ode e'%licitly %ro(ides that the %artnershi% retains its juridical %ersonality e(en if it fails to register. The failure to register the contract of %artnershi% does not in(alidate the same as among the %artners, so long as the contract has the essential reGuisites, ecause the main %ur%ose of registration is to gi(e notice to third %arties, and it can e assumed that the mem ers themsel(es knew of the contents of their contract. An the case at ar, non<com%liance with this directory %ro(ision of the law will not in(alidate the %artnershi% considering that the totality of the e(idence %ro(es that res%ondent and Jacinto indeed forged the %artnershi% in Guestion.

<

Agad ( Ma ato F Bianca

G.R. No. L/24193 *+ne 28, 1968 M"$RI%IO "G"#, plaintiff-appellant, vs. !E=ERINO M","TO 'n& M","TO 'n& "G"# %OMP"N>, defendants-appellees. '(ts)

The complaint alleged that the plaintiff and defendant +everino >abato are partners in a fishpond business 'pursuant to a public instrument - Annex "A"(. "laintiff filed said complaint against defendant for the alleged failure and refusal of >abato to render accounts for the years 2F83 to 2F47. >abato denied the existence of said partnership upon the ground that the contract therefore had not been perfected, despite the execution of Annex "A", because Agad had allegedly failed to give his "2,DDD contribution to the partnership capital. T!- ?ismissed case for failure to state a cause of action. "nne? 9"9, is n+-- 'n& voi&, p+rs+'nt to "rt. 1@@3 o5 o+r %ivi- %o&e, be('+se 'n inventor1 o5 t8e 5is8pon& re5erre& in s'i& instr+ment 8'& not been 'tt'(8e& t8ereto. I!!$E) /O0 Art 2337 is applicable in this case1 HEL#) 0O Articles 2332 and 2337 of said !ode provide5 Art. 2332. 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. 2337. A contract of partnership is void, whenever immovable property is contributed thereto, if inventory of said property is not made, signed by the parties< and attached to the public instrument. The issue before us hinges on whether or not "immovable property or real rights" have been contributed to the partnership under consideration. &n Annex "A" the partnership was established "to operate a fishpond", not to "engage in a fishpond business". >oreover, none of the partners contributed either a fishpond or a real right to any fishpond. Their contributions were limited to the sum of "2,DDD each. &ndeed, "aragraph E of Annex "A" provides5 That the capital of the said partnership is Two Thousand '"B,DDD.DD( "esos "hilippine !urrency, of which One Thousand '"2,DDD.DD( pesos has been contributed by +everino >abato and One Thousand '"2,DDD.DD( "esos has been contributed by >auricio Agad.

xxx

xxx

xxx

The operation of the fishpond mentioned in Annex "A" was the purpose of the partnership. 0either 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. /G,*, O*,, we find that said Article 2337 of the !ivil !ode 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

3BJA&ATA3N6 3H !A@TN0@6 AM3N& T80M60JV06 RO(AS v MAGLANA #ACTS: Maglana and @ojas e'ecuted their articles of co<%artnershi% called 010. At had an indefinite term, was registered with the 607, and had a Timer Jicense. Jater, Agustin !ahamitang ecame an industrial %artner and another articles of co< %artnershi% was e'ecuted. The term of the second co<%artnershi% was fi'ed to /+ years. After some time, the three e'ecuted a conditional sale of interest in the %artnershi% where Magalana and @ojas shall %urchase the interest, share, and %artici%ation of !ahamotang. At was agreed that, after %ayment of such including the loan secured y !ahamotang, the two shall ecome owners of all eGui%ment contri uted y !ahamotang. The two continued the %artnershi% without any written agreement or reconstitution of the articles of %artnershi%. 6u seGuently, @ojas entered into a contarct with 7M6 0state. Maglana reminded him of his contri ution to the ca%ital in(estments and his duties to the %artnershi%. @ojas said he would not e a le to com%ly. Maglana told @ojas that the latter is only entitled to "+, of the %rofits, which was the sharing from *=#?<*=#= without dis%ute. @ojas took funds from the %artnershi% which was more than his share. Maglana notified @ojas that he had dissol(ed the %artnershi%. @ojas filed an action against Magallana. The 7HA ruled that the %artnershi% of the two after !ahamotang left was one de facto and at will. The 67 said that it was not, considering that the first %artnershi% was ne(er dissol(ed. With regard to the issue of unilateral dissolution, the 67 held that Maglana had the %ower to doso. ISSUE: *. W-N the %artnershi% carried on after the second %artnershi% was a de facto %artnershi% and at will. N3 2. W-N Magalana may unilaterally dissol(e the %artnershi%. 506

HELD: *. There was no intention to dissol(e the first %artnershi% u%on the constitution of the second as e(erything else was the same e'ce%t for the fact that they took in an industrial %artner) they %ursued the same %ur%oses, the ca%ital contri utions call for the same amounts, all su seGuent renewals of Tim er Jicense were secured in fa(or of the first %artnershi%, all usinesses were carried out under the registered articles. To all intents and %ur%oses therefore, the Hirst Articles of !artnershi% were only amended, in the form of 6u%%lementary Articles of 7o<!artnershi%. 3n the other hand, there is no dis%ute that the second %artnershi% was dissol(ed y common consent. 6aid dissolution did not affect the first %artnershi% which continued to e'ist. 6ignificantly, Maglana and @ojas agreed to %urchase the interest, share and %artici%ation in the second %artnershi% of !ahamotang and that thereafter, the two CMaglana and @ojasE ecame the owners of eGui%ment contri uted y !ahamotang. Maglana e(en reminded @ojas of his o ligation to contri ute either in cash or in eGui%ment, to the ca%ital in(estment of the %artnershi% as well as his o ligation to %erform his duties as logging su%erintendent. This reminder cannot refer to any other ut to the %ro(isions of the duly registered Articles of 7o<!artnershi%. ". As there are only two %arties when Maglana notified @ojas that he dissol(ed the %artnershi%, it is in effect a notice of withdrawal. Bnder Article *>/+, %ar. " of the 7i(il 7ode, even i< )!e%e i$ a $,e&i<ied )e%m1 one ,a%)ne% &an &a-$e i)$ di$$o"-)ion /. e+,%e$$". Bi)!d%aBin even /e<o%e )!e e+,i%a)ion o< )!e ,e%iod1 Bi)! o% Bi)!o-) A-$)i<ia/"e &a-$e. 3f course, if the cause is not justified or no cause was gi(en, the withdrawing %artner is lia le for damages ut in no case can he e com%elled to remain in the firm. With his withdrawal, the num er of mem ers is decreased, hence, the dissolution. And in whate(er way he may (iew the situation, the conclusion is ine(ita le that @ojas and Maglana shall e guided in the liGuidation of the %artnershi% y the %ro(isions of its duly registered Articles of 7o<!artnershi%$ that is, all %rofits and losses of the %artnershi% shall e di(ided Ishare and share alikeI etween the %artners. But an accounting must first e made and which in fact was ordered y the trial court and accom%lished y the commissioners a%%ointed for the %ur%ose. According to the 7ommissioners2 re%ort, @ojas is not entitled to any %rofits as he failed to gi(e the amount he had undertaken to contri ute thus, had ecome a de tor of the %artnershi%. Maglana cannot e lia le for damages as @ojas a andoned the %artnershi% thru his acts and also took funds in an amount more than his contri ution San&!o v LiCa%%a a ' *%i$

The %laintiff rought an action for the rescission of the %artnershi% contract etween himself and the defendant and the reim ursement of his in(estment worth #+,+++%h% with interest at *" %er cent %er annum form 3cto er *#, *="+, with costs, and any other just and eGuita le remedy against said defendant. The defendant

denies generally and s%ecifically all the allegations of the com%laint and asked for the dissolution of the %artnershi%, and the %ayment to him as its manager and administrator !#++ monthly from 3cto er *#, *="+ until the final dissolution with interest. The 7HA found that the defendant had not contri uted all the ca%ital he had ound himself to in(est hence it demanded that the defendant liGuidate the %artnershi%, declared it dissol(ed on account of the e'%iration of the %eriod for which it was constituted, and ordered the defendant, as managing %artner, to %roceed without delay to liGuidate it, su mitting to the court the result of the liGuidation together with the accounts and (ouchers within the %eriod of thirty days from recei%t of notice of said judgment. The %laintiff a%%ealed from said decision %raying for the rescission of the %artnershi% contract etween him and the defendant in accordance with Art. **"D. Assue) W-N %laintiff acGuired the right to demand rescission of the %artnershi% contract according to article **"D of the 7i(il 7ode. 8eld) The 67 ruled that owing to the defendant2s failure to %ay to the %artnershi% the whole amount which he ound himself to %ay, he ecame inde ted to the %artnershi% for the remainder, with interest and any damages occasioned there y, ut the %laintiff did not there y acGuire the right to demand rescission of the %artnershi% contract according to article **"D of the 7ode. Article **"D cannot e a%%lied to the case in Guestion, ecause it refers to the resolution of o ligations in general, whereas articles *.>* and *.>" s%ecifically refer to the contract of %artnershi% in %articular. And it is a well<known %rinci%le that s%ecial %ro(isions %re(ail o(er general %ro(isions. 8ence, 67 dismissed the a%%eal left the decision a%%ealed from in full force. < !ang Jim and &al(e: ( Jo 6eng F 7ary &.@. No. J<*./*> 3cto er "*, *="* !AN& JAM and B0NAT3 &AJV0M, %laintiffs<a%%ellees, (s. J3 60N&, defendant<a%%ellant. 7ohn, Hisher and 1eWitt for a%%ellant. No a%%earance for a%%ellees.

6T@00T, J.)

Hacts) Jo 6eng and !ang Jim, 7hinese residents of the 7ity of Manila, were %artners, under the firm name of Jo 6eng and 7o., in the usiness of running a distillery, known as I0l !rogreso,I in the Munici%ality of !aom ong, in the !ro(ince of Bulacan. The land on which said distillery is located as well as the uildings and im%ro(ements originally used in the usiness were the %ro%erty of another 7hinaman, named Jo 5ao, who, leased the same to the firm of Jo 6eng and 7o. for the term of three years. B%on the e'%iration of this lease a new written contract, the lease was e'tended for fifteen years. Neither the original contract of lease nor the agreement e'tending the same was inscri ed in the %ro%erty registry, for the reason that the estate which is the su ject of the lease has ne(er at any time een so inscri ed. !ang Jim sold all his interest in the distillery to his %artner Jo 6eng, thus %lacing the latter in the %osition of sole owner$ Jo 6hui, again acting as attorney in fact of Jo 5ao, e'ecuted and acknowledged efore a notary %u lic a deed %ur%orting to con(ey to !ang Jim and another 7hinaman named Benito &al(e:, the entire distillery %lant including the land used in connection therewith. As in case of the lease this document also was ne(er recorded in the registry of %ro%erty. Thereafter !ang Jim and Benito &al(e: demanded %ossession from Jo 6eng, ut the latter refused to yield$ and the %resent action of unlawful detainer was thereu%on initiated y !ang Jim and Benito &al(e: 8eld) !laintiff !ang Jim has occu%ied a dou le role in the transactions which ga(e rise to this litigation, namely, first, as one of the lessees$ and secondly, as one of the %urchasers now seeking to terminate the lease. These two %ositions are essentially antagonistic and incom%ati le. 0(ery com%etent %erson is y law ound to maintain in all good faith the integrity of his own o ligations$ and no less certainly is he ound to res%ect the rights of any %erson whom he has %laced in his own shoes as regards any contract %re(iously entered into y himself. While yet a %artner in the firm of Jo 6eng and 7o., !ang Jim %artici%ated in the creation of this lease, and when he sold out his interest in that firm to Jo 6eng this

o%erated as a transfer to Jo 6eng of !ang JimKs interest in the firm assets, including the lease$ and !ang Jim cannot now e %ermitted, in the guise of a %urchaser of the estate, to destroy an interest deri(ed from himself, and for which he has recei(ed full (alue. The ad faith of the %laintiffs in seeking to de%ri(e the defendant of this lease is strikingly re(ealed in the circumstance that %rior to the acGuisition of this %ro%erty !ang Jim had een %artner with Jo 6eng and Benito &al(e: an em%loyee. Both therefore had een in relations of confidence with Jo 6eng and in that %osition had acGuired knowledge of the %ossi ilities of the %ro%erty and %ossi ly an e'%erience which would ha(e ena led them, in case they had acGuired %ossession, to e'%loit the distillery with %rofit. 3n account of his status as %artner in the firm of Jo 6eng and 7o., !ang Jim knew that the original lease had een e'tended for fifteen years$ and he knew the e'tent of (alua le im%ro(ements that had een made thereon. 7ertainly, as o ser(ed in the a%%ellantKs rief, it would e shocking to the moral sense if the condition of the law were found to e such that !ang Jim, after %rofiting y the sale of his interest in a usiness, worthless without the lease, could inter(ene as %urchaser of the %ro%erty and confiscate for his own enefit the %ro%erty which he had sold for a (alua le consideration to Jo 6eng. The sense of justice recoils efore the mere %ossi ility of such e(entuality. A o(e all other %ersons in usiness relations, %artners are reGuired to e'hi it towards each other the highest degree of good faith. An fact the relation etween %artners is essentially fiduciary, each eing considered in law, as he is in fact, the confidential agent of the other. At is therefore acce%ted as fundamental in eGuity juris%rudence that one %artner cannot, to the detriment of another, a%%ly e'clusi(ely to his own enefit the results of the knowledge and information gained in the character of %artner. Thus, it has een held that if one %artner o tains in his own name and for his own enefit the renewal of a lease on %ro%erty used y the firm, to commence at a date su seGuent to the e'%iration of the firmKs lease, the %artner o taining the renewal is held to e a constructi(e trustee of the firm as to such lease. And this rule has e(en een a%%lied to a renewal taken in the name of one %artner after the dissolution of the firm and %ending its liGuidation.

T-a$on 4 San Ped%o v. Kamo%a 4 Son$ ?893D@ 1on Tuason 4 1on 6an !edro entered into a mercantile %artnershi% en comandita with Vi(es. At was named XYZJuis Vi(es 4 7o. Jater on, Vi(es died so the %artnershi% was dissol(ed and was reorgani:ed under the name XYZTuason 4 6an !edro.XY[ This %artnershi% was in the usiness of wood sawyers and uilding contracts.E

Tuason 4 6an !edro was only com%osed of the sur(i(ing %artners and this %artnershi% assumed the usiness of the old one. 3ne day, 1on Tuason entered into a contract with a certain 1on Heliciano to construct 1on HelicianoKs house. An their contract, it was not mentioned that it was made on ehalf of the %artnershi%. 1on 6an !edro makes this %rotest Cwith res%ect to deli(ery of the houseE on ehalf of the firm, the manager of which is 1on Tuason. This action is to reco(er the %rice of the house. 3 jection was made on the right of the %artnershi% to sue ) w-n a %artnershi% can maintain an action in its own ehalf u%on a contract entered into y one of the %artners in his own name. An the facts on record it was made to a%%ear that) o !artnershi% owns the credit o !artnershi% was in %ossession of the document e(idencing the credit o Atty a%%earing for the %artnershi% held a %ower of attorney from the %artnershi%, e'ecuted y Tuason as managing %artner o 0(erything Tuason did was done y the !artnershi% o The action is solidary, therefore, the result is the same w-n it was rought y the %artnershi%. I!ayment should e made to the %erson in whose fa(or the o ligation is constituted, or to some other %erson authori:ed to recei(e it in his name.I CArt. **." of the 7i(il 7ode.E Note) !laintiff is the %artnershi%, defendants are the heirs of 1on Heliciano. I$$-e5He"d: 6hould %ayment e made to the %artnershi%L <<<506 Ra)io) CThis %art is co%y %aste as A do not know how to re%hrase and sometimes do not understand old case kasiE Manresa says) IThe first of these cases, the most natural and sim%le, refers not only to the %erson who may ha(e een the creditor at the time the o ligation was created ut rather to the %erson who is the creditor at the time %ayment is due. . . . That the %rinci%le laid down y the code has this wide meaning is demonstrated y the fact that it has no rules, as ha(e other codes Cfor instance, the Argentine codeE which e'%ressly authori:ed heirs, assignees, and su rogated creditors to demand %ayment, and the right of these %ersons eing unGuestiona le they must e regarded as included in the first %art of Art **.", ecause, although the o ligation was not created in their fa(or, it has su seGuently resulted that its constitutions is to their enefit. When %rocess was ser(ed u%on the defendant to answer the com%laint, it could e seen that the %laintiff was not an heir, an assignee, or a su rogated creditor, %hysically distinct from the %erson who made the contract. But this (ery same %erson, also ringing with him into the case the res%onsi ility of a general %artnershi%, which, far from declining to entertain the e'ce%tions, set<offs, and counter claims which might e a(aila le against the original creditor, undertakes to defend against them as the original, actual, and sole creditor. At is e(ident that although Tuason may ha(e o%erated in his own name, it certainly was not with his own %ri(ate funds. Therefore it was that this contract was

communicated to the %artnershi% which ecame res%onsi le therefor. CArt. */D, 7ode of 7ommerce.E An (iew of the understanding and agreement etween Tuason and the %artnershi%, the res%onsi ility of Tuason eing included in the res%onsi ility of Tuason 4 6an !edro, the lia ility of the firm is not less than the %ersonal lia ility of the %artner, as the %artnershi% was a general one. The action rought y the firm is sim%ly the action in fa(or of the %artner assumed y the firm. 67 says the action rought y the %artnershi% will lie, and the %ayment which may e made to the %artnershi% u%on the circumstances stated will e %erfectly legal. The owner, 1on Heliciano, and, y his death, his heirs, are ound to %ay all the %rice agreed u%on to the contractor, ecause the house urned after the work terminated, and after the defendants had ecome in default with res%ect to their o ligation to recei(e it,I for although it is e(ident that the contractor has done e(erything incum ent u%on him for the deli(ery of the house, it is none the less true, as a matter of fact, that no such deli(ery took %lace. !etition denied. Ca)a"an v Ga)&!a"ian F !at HA7T6) 7atalan and &atchalian are %artners. They mortgaged two lots to 1r. Mara(e together with the im%ro(ements thereon to secure a credit from the latter. The %artnershi% failed to %ay the o ligation. The %ro%erties were sold to 1r. Mara(e at a %u lic auction. 7atalan redeemed the %ro%erty and he contends that title should e cancelled and a new one must e issued in his name. A66B0) 1id 7atalan2s redem%tion of the %ro%erties make him the a solute owner of the landsL 80J1) No. Bnder Article *>+? of the N77 e(ery %artner ecomes a trustee for his co%artner with regard to any enefits or %rofits deri(ed from his act as a %artner. 7onseGuently, when 7atalan redeemed the %ro%erties in Guestion, he ecame a trustee and held the same in trust for his co%artner &atchalian, su ject to his right to demand from the latter his contri ution to the amount of redem%tion. < Jim Tanhu ( @amolete F Jen Han"on v Ha-$$e%mann and Beam ' Civ

-. .anlon vs. .aussermann and Beam

Facts:

)his action was originall# instituted "# R. P. Danlon to co'pel the defendants, ;ohn @.Dausser'ann and !. @. :ea', to account for a share of the profits gained "# the' inreha"ilitating the plant of the :enguet Consolidated $ining Co'pan# and in particular to co'pelthe' to surrender to the plaintiff ,4,444 shares of the stoc% of said co'pan#, with dividendspaid thereon.It was initiall# agreed "# Danlon, Dausser'ann, :ea' and ellner that P8,,444.44 was neededto reha"ilitate the 'ineH P,4,444.44 would co'e fro' Danlon "# securing and o"tainingsu"scriptions for the co'pan#1s stoc%s, P<,,444.44 would co'e fro' Dausser'ann and :ea'. )he# were to receive co'pensation in the for' of shares of stoc% for the services rendered inthe flotation of this proposition. )he funds were needed on a certain date. It was also stated inthe contract that Dausser'ann and :ea' would "e discharged if ellner could not provide thea'ount due fro' hi' within the ti'e fra'e stipulated.Danlon was una"le to raise the P8,,444.44, so that Dausser'ann and :ea' 'adearrange'ents to finance the reha"ilitation of the 'ine. :ecause of this new arrange'ent, theco'pan# "eca'e profita"le that it was a"le to pa# dividends. :ecause of this, the value of the co'pan#1s stoc%s appreciated. Held: Danlon is not entitled to an accounting for his share in the profits of the co'pan#HDausser'ann and :ea' are a"solved. Under the e3uita"le doctrine, if the contracting parties have treated ti'e as of the essence of the contract, the delin3uenc# will not "e excused and specific perfor'ance will not "e grantedH"ut on the other hand, if it appears that ti'e has not "een 'ade of the essence of the contract,e3uit# will relieve fro' the delin3uenc# and specific perfor'ance 'a# "e granted, dueco'pensation "eing 'ade for the da'age caused "# the dela#. )i'e is of the essence of the contract for the sale of an option on 'ining propert#, or a contractfor the sale thereof, even though there is no express stipulation to that effect. )he sa'e idea isclearl# applica"le to a contract li%e that now under consideration which provides for thereha"ilitation of a 'ining plant with funds to "e supplied "# the contractor within a li'ited period.

<

5u ( NJ@7 < Bianca

G.R. Nos. 11181A/11 *+ne 16, 1990 *"ME! >$ 'n& BIL!ON >O$NG, petitioners, vs. THE N"TION"L L",OR REL"TION! %OMMI!!ION, L",OR "R,ITER #"NIEL %. %$ETO, T"N#$"> #I!TILLER> IN%., ERN"N#O #$R"N, E#$"R#O P"LIB"N, RO6$E E!TO%E "N# RO#RIGO !"NTO!,respondents. '(ts)

"rivate respondents-employees ernando ?uran, ,duardo "aliwan, *o;ue ,stoce, and *odrigo +antos were employees of respondent corporation Tanduay ?istillery, &nc, 'T?&( who were retrenched. A complaint was filed by private respondents against T?& and petitioners #u and #oung "doing business under the name and style of Tanduay ?istillers". )A - declared that the retrenchment is illegal thereby ordering respondent Tanduay ?istillery, &nc., to reinstate the complainants to their former position with bac=wages up to the time of change of ownership, if one has ta=en place. 0)*! H affirmed )A A /rit of ,xecution be was against Tanduay ?istiller, &nc., /ilson #oung and 9ames #u to immediately reinstate complainants ernando ?uran, *odrigo +antos, *o;ue ,stoce and ,duardo ?aliwan to their respective positions. "etitioners oppose a motion for execution on the ground that "the >otion for ,xecution is without any basis in so far as it prays for the issuance of a writ of execution against respondent Tanduay ?istillers, which is an entity separate and distinct from respondent Tanduay ?istillery, &nc., and respondents 9ames #u and /ilson #oung." ISSUE: W3N res%ondent NJ@7 committed gra(e a use of discretion in holding %etitioners 5u and 5oung lia leL HELD: 506 The JA2s decision does not in any manner o ligate Tanduay 1istillers, or e(en %etitioners 5u and 5oung for that matter, to reinstate res%ondents. 3nly T1A was held lia le to reinstate res%ondents u% to the time of change of ownershi%, and for se%aration enefits.

JA went eyond what was dis%osed y the decision and issued an order which reGuired . . . Tanduay 1istillers, Anc., Wilson 5oung and James 5u to immediately reinstate com%lainants Hernando 1uran, @odrigo 6antos, @oGue 0stoce and 0duardo 1aliwan to heir res%ecti(e %ositions. The order of e'ecution and the writ of e'ecution ordering %etitioners and Tanduay 1istillers to reinstate %ri(ate res%ondents em%loyees are, therefore, null and (oid. W80@0H3@0, the %etition is here y &@ANT01, The Guestioned 3rder of the Ja or Ar iter 1aniel 7. 7ueto dated No(em er *?, *==" and the decision of the National Ja or @elations 7ommission u%holding said order are set aside as null and (oid.