CASE DIGESTS ON THE LAW ON TRUSTS, PARTNERSHIPS AND AGENCY

1. G.R. No. L-41182-3 April 16, 1988

DR. CARLOS L. SEVILLA and LINA O. SEVILLA

vs.
THE COURT OF APPEALS, TOURIST WORLD SERVICE, INC., ELISEO S.CANILAO, and
SEGUNDINA NOGUERA

FACTS:

Noguera and the Tourist World Service, Inc. entered a contract where the latter leased the premises
of the former as a branch office. In the said contract, Sevilla held herself solidarily liable with Tourist
World for monthly rent. She also ran the branch office for which she earned commissions for her
efforts.

When Tourist World Service, Inc. was informed that Sevilla was connected with a rival firm, and
since the branch office was anyhow losing, Tourist World Service decided to close down its office.
Because of this, the corporate secretary of Tourist World went over to the branch office and
padlocked the premises. When Sevilla and her employees could enter the locked premises, she filed
a complaint against Tourist World and Noguera. Both appellees answered with counterclaims. For
apparent lack of interest of the parties therein, the trial court ordered the dismissal of the case
without prejudice.

ISSUE: Whether or not Sevilla and Tourist World Service, Inc. were engaged in a partnership.

HELD:

The Supreme Court held that when Lina Sevilla agreed to man Tourist World Service, Inc.'s Ermita
office, she must have done so pursuant to a contract of agency. It is the essence of this contract that
the agent renders services "in representation or on behalf of another.” In the case at bar, Sevilla
solicited airline fares, but she did so for and on behalf of her principal, Tourist World Service, Inc. for
which she received compensation in the form of commissions. The Court is convinced that the ties
had contemplated a principal agent relationship, rather than a joint managament or a partnership.
2. G.R. No. L-35469 March 17, 1932

E. S. LYONS, plaintiff-appellant,
vs.
C. W. ROSENSTOCK, Executor of the Estate of Henry W. Elser, deceased, defendant-appellee.

FACTS:

(See Book V of Paras, page 599.)

ISSUE: Whether or not a partnership existed.

HELD:

No. If an actual relation of partnership had existed in the money used, the case might be difference;
and much emphasis is laid in the appellant's brief upon the relation of partnership which, it is
claimed, existed. But there was clearly no general relation of partnership, under article 1678 of the
Civil Code. It is clear that Elser, in buying the San Juan Estate, was not acting for any partnership
composed of himself and Lyons, and the law cannot be distorted into a proposition which would
make Lyons a participant in this deal contrary to his express determination.
3. G.R. No. 175073 August 15, 2011

ESTATE OF MARGARITA D. CABACUNGAN, represented by LUZ LAIGO-ALI, Petitioner,

vs.
MARILOU LAIGO, PEDRO ROY LAIGO, STELLA BALAGOT and SPOUSES MARIO B. CAMPOS
AND JULIA S. CAMPOS, Respondents.

FACTS:

Unknown to the other children of Margarita, the mother transferred the tax declarations of her three
(3) lands to her son, Roberto, to support his application for travel to the US. Upon returning, Roberto
married Estella and adopted her two children, Pedro and Marilou. Sometime later, Roberto sold one
of the lands to the spouses Campos, and separately sold the two remaining lands to his two adopted
children. Margarita came to know of the sale during the wake of Roberto. Hence, Roberto’s siblings
filed a complaint for annulment of the said sales and for the recovery of ownership and possession
of the land.

The trial court ruled against the plaintiffs on the basis that there was no express trust between
Roberto and his mother. The Court of Appeals affirmed the decision of the trial court.

ISSUE: Whether or not a trust was created.

HELD:

Yes. The Court deduced that the inscription of Roberto’s name in the Affidavit of Transfer as
Margarita’s transferee is not for the purpose of transferring ownership to him but only to enable him
to hold the property in trust for Margarita. As a trustee of a resulting trust, therefore, Roberto, like the
trustee of an express passive trust, is merely a depositary of legal title having no duties as to the
management, control or disposition of the property except to make a conveyance when called upon
by the cestui que trust. Hence, the sales he entered into with respondents are a wrongful conversion
of the trust property and a breach of the trust.
4. G.R. No. L-9186 April 29, 1957

COLLECTOR OF INTERNAL REVENUE, petitioner,

vs.
JUAN ISASI, M. SALUSTIANA ALDECOA, CLAUDIO ZULOAGA, MIREN ZULOAGA, HUGO P.
RODRIGUEZ, and THE COURT OF TAX APPEALS, respondents.

FACTS:

Juan Isasi, M. Salustiana Aldecoa, Claudio Zuloaga, Jr., and Miren Zuloaga formed a partnership
known as "Aldecoa, Zuloaga e Isasi". The partnership agreement was duly registered on October 27,
1947. The firm filed its income tax returns and that the members of the partnership filed their
individual income tax returns, in which returns they indicated their shares in the partnership profits.
On June 30, 1951, the partners agreed to dissolve the partnership.

Believing that the partnership was a duly registered general co-partnership (sociedad colectiva) and
therefore not subject to income tax under Section 24 of the NIRC, respondents filed with the
Collector, a claim for the refund of P26,873.66 which the partnership had paid as income tax.

ISSUE: Whether or not the partnership “Aldecoa, Zuloaga e Isasi” is a limited partnership.

HELD:

No. Even a casual scrutiny of the partnership agreement executed by the respondent partners would
reveal that they followed the pattern set for the pattern set for the regular co-partnership. They have
a firm name — Aldecoa, Zuloaga e Isasi; that firm name was composed of all the surnames of the
partners — to which the words "and company" is not added; the management of the firm was
entrusted to a partner, Don Juan Isasi; the contribution of all the partners was expressly provided
therein — there being no person contributing a specific amount of capital to a common fund to
become liable for the business transactions of the firm executed exclusively by others under a
collective name, as is the case in limited partnerships; the duration of the partnership was made to
last until June 30, 1952; and it allowed its manager, Don Juan Isasi to engage in the same kind of
undertaking. It is unmistakable, notwithstanding the title of the partnership agreement, that the
partners intended to organize a general partnership under the Code of Commerce.
5. G.R. No. L-3704 December 12, 1907

LA COMPAÑIA MARITIMA, plaintiff-appellant,

vs.
FRANCISCO MUÑOZ, ET AL., defendants-appellees.

FACTS:

In 1905, Francisco Muñoz, Emilio Muñoz, and Rafael Naval formed an ordinary general mercantile
under the name “Francisco Muñoz & Sons”. Francisco was the capitalist partner while the other two
were industrial partners. In the articles of partnership, it was agreed upon by the three that for profits,
Francisco shall have a 3/4th share while the other two would have 1/8th each. For losses, only
Francisco shall bear it.

Later, the partnership was sued by La Compañia Martitama for collection of sum of money
amounting to P26,828.30. The partnership lost the case and was ordered to make said payment;
that in case the partnership can’t pay the debt, all the partners should be liable for it.

ISSUE: Whether or not Muñoz is liable to third persons for the obligations contracted by the
partnership.

HELD:

The Court held that neither on principle nor on authority can the industrial partner be relieved from
liability to third persons for the debts of the partnership.

There is no injustice in imposing this liability upon the industrial partners. They have a voice in the
management of the business, if no manager has been named in the articles; they share in the profits
and as to third persons it is no more than right that they should share in the obligations. It is admitted
that if in this case there had been a capitalist partner who had contributed only P100 he would be
liable for this entire debt of P26,000.
6. G.R. No. L-25007 March 2, 1926

PACIFIC COMMERCIAL COMPANY, plaintiff-appellee,

vs.
ABOITIZ & MARTINEZ, ET AL., defendants.
JOSE MARTINEZ, defendant-appellant.

FACTS:

In 1919, Arnaldo de Silva, Guillermo Aboitiz, Vidal Aboitiz and Jose Martinez formed a partnership.
De Silva, Guillermo, and Vidal were the capitalist partners while Martinez was the industrial partner.
The articles of partnership contained, among others, that Martinez may also be liable for losses but
only to the extent of his shares in the profits which was at 30%.

The partnership incurred loans from Pacific Commercial Company which the partnership failed to
pay. The partnership’s property was exhausted but there remained an unpaid balance for which
PCC sued the partnership. The trial court issued a judgment where it ordered that the deficiency
should be satisfied by the properties of the three capitalist partners; that in the event the properties
of the three will not be enough, the remaining balance shall issue against the property of Martinez.
Martinez appealed the decision.

ISSUE: Whether or not Martinez is liable for the said debt.

HELD:

Yes. All the members of the general copartnership, be they or be they not managing partners of the
same are liable personally and in solidum with all their property for the results of the transaction
made in the name and for the account of the partnership, under the signature of the latter, and by a
person authorized to make use thereof.

The Supreme Court also emphasized that liability for losses relates merely to the distribution of
losses among the partners themselves in the settlement of the partnership affairs and has no
reference to partnership obligations or liabilities to third parties.
7. G.R. No. 144214 July 14, 2003

LUZVIMINDA J. VILLAREAL, DIOGENES VILLAREAL and CARMELITO JOSE, petitioners,

vs.
DONALDO EFREN C. RAMIREZ and Spouses CESAR G. RAMIREZ JR. and CARMELITA C.
RAMIREZ,respondents.

FACTS:

Villareal, Carmelito Jose and Jesus Jose formed a partnership for the operation of a restaurant and
catering business. Ramirez joined as a partner in the business with the capital contribution of
P250,000. Jesus Jose withdrew from the partnership and within the same time, Villareal and
Carmelito Jose, closed the business without prior knowledge of respondents. Spouses Cesar and
Carmelita, who financed their son’s, Efren’s, capital contribution, wrote a letter to petitioners stating
that they were no longer interested in continuing the partnership and that they were accepting the
latter’s offer to return their capital contribution. This was left unheeded by the petitioners, and by
reason of which respondents filed a complaint in the RTC.

ISSUE: Whether or not petitioners are liable to respondents for the latter's share in the partnership

HELD:

No. The Court held that respondents have no right to demand from petitioners the return of their
equity share. Except as managers of the partnership, petitioners did not personally hold its equity or
assets. "The partnership has a juridical personality separate and distinct from that of each of the
partners."23 Since the capital was contributed to the partnership, not to petitioners, it is the
partnership that must refund the equity of the retiring partners.

However, before the partners can be paid their shares, the creditors of the partnership must first be
compensated. Therefore, the exact amount of refund equivalent to respondents’ one-third share in
the partnership cannot be determined until all the partnership assets will have been liquidated and all
partnership creditors have been paid.
8. G.R. No. 167379 June 27, 2006

PRIMELINK PROPERTIES AND DEVELOPMENT CORPORATION and RAFAELITO W.

LOPEZ, Petitioners,
vs.
MA. CLARITA T. LAZATIN-MAGAT, JOSE SERAFIN T. LAZATIN, JAIME TEODORO T. LAZATIN
and JOSE MARCOS T. LAZATIN, Respondents.

FACTS:

In 1994, Primelink Properties and the Lazatin siblings entered into a joint venture agreement
whereby the Lazatins shall contribute a huge parcel of land and Primelink shall develop the same
into a subdivision. For 4 years however, Primelink failed to develop the said land. So in 1998, the
Lazatins filed a complaint to rescind the joint venture agreement with prayer for preliminary
injunction. In said case, Primelink was declared in default or failing to file an answer and for asking
multiple motions for extension. The trial court eventually ruled in favor of the Lazatins and it ordered
Primelink to return the possession of said land to the Lazatins as well as some improvements which
Primelink had so far over the property without the Lazatins paying for said improvements. This
decision was affirmed by the Court of Appeals. Primelink is now assailing the order; that turning over
improvements to the Lazatins without reimbursement is unjust; that the Lazatins did not ask the
properties to be placed under their possession but they merely asked for rescission.

ISSUE: Whether or not the joint venture entered into by the parties is a form of partnership

HELD:

Yes. With the rescission of the JVA on account of petitioners’ fraudulent acts, all authority of any
partner to act for the partnership is terminated except so far as may be necessary to wind up the
partnership affairs or to complete transactions begun but not yet finished. On dissolution, the
partnership is not terminated but continues until the winding up of partnership affairs is completed.

The transfer of the possession of the parcels of land and the improvements thereon to respondents
was only for a specific purpose: the winding up of partnership affairs, and the partition and
distribution of the net partnership assets as provided by law. After all, Article 1836 of the New Civil
Code provides that unless otherwise agreed by the parties in their JVA, respondents have the right
to wind up the partnership affairs.
9. G.R. No. 154486 December 1, 2010

FEDERICO JARANTILLA, JR., Petitioner,

vs.
ANTONIETA JARANTILLA, BUENAVENTURA REMOTIGUE, substituted by CYNTHIA
REMOTIGUE, DOROTEO JARANTILLA and TOMAS JARANTILLA, Respondents.

FACTS:

Antonieta filed a complaint against Buenaventura, Cynthia, Federico., Doroteo and Tomas claiming
that she was entitled to a share in the profits and co-ownership over the subject real properties in the
name of the defendants since the only way the defendants could have purchased these properties
were through the partnership as they had no other source of income. The respondents denied
having formed a partnership with Antonieta. However, During the course of the trial at the RTC,
Frederico entered into a compromise agreement with Antonieta wherein he supported Antonieta’s
claims and asserted that he too was entitled to six percent (6%) of the supposed partnership in the
same manner as Antonieta was.

ISSUE: Whether or not a partnership was created.

HELD:

No. There is a co-ownership when an undivided thing or right belongs to different persons. It is a
partnership when two or more persons bind themselves to contribute money, property, or industry to
a common fund, with the intention of dividing the profits among themselves.

Persons who contribute property or funds for a common enterprise and agree to share the gross
returns of that enterprise in proportion to their contribution, but who severally retain the title to their
respective contribution, are not thereby rendered partners. They have no common stock or capital,
and no community of interest as principal proprietors in the business itself which the proceeds
derived. The common ownership of property does not itself create a partnership between the
owners, though they may use it for the purpose of making gains; and they may, without becoming
partners, agree among themselves as to the management, and use of such property and the
application of the proceeds therefrom.
10. G.R. No. 140528 and 140553 December 7, 2011

MARIA TORBELA, represented by her heirs, namely: EULOGIO TOSINO, husband and
children: CLARO, MAXIMINO, CORNELIO, OLIVIA and CALIXTA, all surnamed TOSINO,
APOLONIA TOSINO VDA. DE RAMIREZ and JULITA TOSINO DEAN; PEDRO TORBELA,
represented by his heirs, namely: JOSE and DIONISIO, both surnamed TORBELA;
EUFROSINA TORBELA ROSARIO, represented by her heirs, namely: ESTEBAN T. ROSARIO,
MANUEL T. ROSARIO, ROMULO T. ROSARIO and ANDREA ROSARIO-HADUCA; LEONILA
TORBELA TAMIN; FERNANDO TORBELA, represented by his heirs, namely: SERGIO T.
TORBELA, EUTROPIA T. VELASCO, PILAR T. ZULUETA, CANDIDO T. TORBELA,
FLORENTINA T. TORBELA and PANTALEON T. TORBELA; DOLORES TORBELA TABLADA;
LEONORA TORBELA AGUSTIN, represented by her heirs, namely: PATRICIO, SEGUNDO,
CONSUELO and FELIX, all surnamed AGUSTIN; and SEVERINA TORBELA ILDEFONSO,
Petitioners,

Vs.

SPOUSES ANDRES T. ROSARIO and LENA DUQUE-ROSARIO and BANCO FILIPINO

SAVINGS AND MORTGAGE BANK, Respondents.

FACTS:

The spouses Eugenio and Marta Torbela received a parcel of land from Marta’s sister. Upon the
death of the spouses, the Land was adjudicated in equal shares among their children. These
children executed a Deed of Absolute Quitclaim over the land in favor of their nephew, Dr. Rosario.
Another Deed of Absolute Quitclaim was executed, this time by Dr. Rosario, acknowledging that he
only borrowed the land and was already returning it to his aunts and uncles. The latter Deed was
notarized but was not immediately annotated on the title of the land, hence, the title was still in the
name of Dr. Rosario. Dr. Rosario mortgaged the land to Banco Filipino for a loan. Dr. Rosario failed
to pay the loan and the mortgage was extra-judicially foreclosed.

The children then filed a complaint for recovery of ownership and possession of the subject land
against Dr. Rosario and Banco Filipino. The trial court ruled in their favor which was affirmed by the
Court of Appeals.

ISSUE: Whether or not an express trust was created

HELD:

Yes. Yes. The Court held that “Express trusts are created by direct and positive acts of the parties,
by some writing or deed, or will, or by words either expressly or impliedly evincing an intention to
create a trust. Under Article 1444 of the Civil Code, “[n]o particular words are required for the
creation of an express trust, it being sufficient that a trust is clearly intended.”62 It is possible to
create a trust without using the word “trust” or “trustee.” Conversely, the mere fact that these words
are used does not necessarily indicate an intention to create a trust. The question in each case is
whether the trustor manifested an intention to create the kind of relationship which to lawyers is
known as trust. It is immaterial whether or not he knows that the relationship which he intends to
create is called a trust, and whether or not he knows the precise characteristics of the relationship
which is called a trust.”
 UNIVERSITY OF NORTHEASTERN PHILIPPINES
COLLEGE OF LAW

COMPILATION OF CASE DIGESTS

IN PARTIAL FULFILLMENT OF THE REQUIERMENTS
IN

AGENCY, TRUSTS AND

PARTNERSHIPS

SUBMITTED TO:

PROS. RIZZA BALLEBAR

SUBMITTED BY:

LEE JOHAN MARIE O. CAAYAO