Professional Documents
Culture Documents
Partnership Digest
Partnership Digest
CA
On April 5, 1988, Nenita A. Anay filed Civil Case No. 88-509, a complaint for
sum of money with damages against Marjorie D. Tocao and William Belo
before the Regional Trial Court of Makati, Branch 140
The trial court held that there was indeed an "oral partnership agreement
between the plaintiff and the defendants. The Court of Appeals affirmed the
lower courts decision.
ISSUE: Whether the parties formed a partnership
HELD: Yes, the parties involved in this case formed a partnership
The Supreme Court held that to be considered a juridical personality, a
partnership must fulfill these requisites:
(1) two or more persons bind themselves to contribute money, property or
industry to a common fund; and
(2) intention on the part of the partners to divide the profits among
themselves. It may be constituted in any form; a public instrument is
necessary only where immovable property or real rights are contributed
thereto.
This implies that since a contract of partnership is consensual, an oral
contract of partnership is as good as a written one.
In the case at hand, Belo acted as capitalist while Tocao as president and
general manager, and Anay as head of the marketing department and
later, vice-president for sales. Furthermore, Anay was entitled to a
percentage of the net profits of the business.
(4) two percent (2%) for her demonstration services. The agreement was
not reduced to writing on the strength of Belo's assurances that he was
sincere, dependable and honest when it came to financial commitments.
On October 9, 1987, Anay learned that Marjorie Tocao had signed a letter
addressed to the Cubao sales office to the effect that she was no longer the
vice-president of Geminesse Enterprise.
95 PHIL 106
Anay attempted to contact Belo. She wrote him twice to demand her
overriding commission for the period of January 8, 1988 to February 5, 1988
and the audit of the company to determine her share in the net profits.
Anay still received her five percent (5%) overriding commission up to
December 1987. The following year, 1988, she did not receive the same
commission although the company netted a gross sales of P 13,300,360.00.
retained the validity of the deed of sale. The Court of Appeals reversed the
RTC. The CA ruled that the sale is void for it is a pactum commissorium
sale which is prohibited under Art. 2088 of the Civil Code (note the disparity
of the purchase price, which is the loan amount, with the actual value of
the property which is after all located in a subdivision).
ISSUE: Whether or not the case filed by Felicidad shall prosper.
HELD: No. Unfortunately, the civil case was filed not against the real party
in interest. As pointed out by Aguila, he is not the real party in interest but
rather it was the partnership A.C. Aguila & Sons, Co. The Rules of Court
provide that every action must be prosecuted and defended in the name
of the real party in interest. A real party in interest is one who would be
benefited or injured by the judgment, or who is entitled to the avails of the
suit. Any decision rendered against a person who is not a real party in
interest in the case cannot be executed. Hence, a complaint filed against
such a person should be dismissed for failure to state a cause of action, as
in the case at bar.
Under Art. 1768 of the Civil Code, a partnership has a juridical personality
separate and distinct from that of each of the partners. The partners
cannot be held liable for the obligations of the partnership unless it is
shown that the legal fiction of a different juridical personality is being used
for fraudulent, unfair, or illegal purposes. In this case, Felicidad has not
shown that A.C. Aguila & Sons, Co., as a separate juridical entity, is being
used for fraudulent, unfair, or illegal purposes. Moreover, the title to the
subject property is in the name of A.C. Aguila & Sons, Co. It is the
partnership, not its officers or agents, which should be impleaded in any
litigation involving property registered in its name. A violation of this rule
will result in the dismissal of the complaint.
PASCUAL v. COMMISSIONER OF INTERNAL REVENUE
AGUILA, JR. v. CA
FACTS: In April 1991, the spouses Ruben and Felicidad Abrogar entered
into a loan agreement with a lending firm called A.C. Aguila & Sons, Co., a
partnership. The loan was for P200k. To secure the loan, the spouses
mortgaged their house and lot located in a subdivision. The terms of the
loan further stipulates that in case of non-payment, the property shall be
automatically appropriated to the partnership and a deed of sale be readily
executed in favor of the partnership. She does have a 90 day redemption
period.
Facts: On June 22, 1965, petitioners Mariano Pascual and Renato Dragon
bought two (2) parcels of land from Santiago Bernardino, et al. and on May
28, 1966, they bought another three (3) parcels of land from Juan Roque.
Ruben died, and Felicidad failed to make payment. She refused to turn over
the property and so the firm filed an ejectment case against her (wherein
she lost). She also failed to redeem the property within the period
stipulated. She then filed a civil case against Alfredo Aguila, manager of the
firm, seeking for the declaration of nullity of the deed of sale. The RTC
The first two parcels of land were sold by petitioners in 1968 to Marenir
Development Corporation, while the three parcels of land were sold by
petitioners to Erlinda Reyes and Maria Samson on March 19, 1970.
Petitioners realized a net profit in the sale made in 1968 in the amount of
P165,224.70, while they realized a net profit of P60,000.00 in the sale made
in 1970. The corresponding capital gains taxes were paid by petitioners in
1973 and 1974 by availing of the tax amnesties granted in the said years.
However, in a letter of then Acting BIR Commissioner Efren I. Plana,
found already in existence; (2) They invested the same, not merely in one
transaction, but in a series of transactions; (3) The aforesaid lots were not
devoted to residential purposes, or to other personal uses, of petitioners
herein.
Although, taken singly, they might not suffice to establish the intent
necessary to constitute a partnership, the collective effect of these
circumstances is such as to leave no room for doubt on the existence of
said intent in petitioners herein.
For purposes of the tax on corporations, our National Internal Revenue
Code, includes these partnerships with the exception only of duly
registered general copartnerships within the purview of the term
"corporation." It is, therefore, clear to our mind that petitioners herein
constitute a partnership, insofar as said Code is concerned and are subject
to the income tax for corporations.
AFISCO INSURANCE CORP. et al. vs. COURT OF APPEALS
G.R. No. 112675. January 25, 1999
DOCTRINE:
Unregistered Partnerships and associations are considered as corporations
for tax purposes Under the old internal revenue code, A tax is hereby
imposed upon the taxable net income received during each taxable year
from all sources by every corporation organized in, or existing under
the laws of the Philippines, no matter how created or organized,
xxx. Ineludibly, the Philippine legislature included in the concept of
corporations those entities that resembled them such as unregistered
partnerships and associations.
Double Taxation is not Present in the Case at Bar Double taxation means
taxing the same person twice by the same jurisdiction for the same thing.
In the instant case, the insurance pool is a taxable entity distince from the
individual corporate entities of the ceding companies. The tax on its income
is obviously different from the tax on the dividends received by the
companies. There is no double taxation.
FACTS:
The Court of Tax Appeal sustained the petitioner's liability. The Court of
Appeals dismissed their appeal.
ISSUE/S:
1.
2.
HELD:
xxx xxx
xxx
were
scared
off
and
the
The sisters then filed a civil case against Manuel for damages equivalent to
60% of the value of the property, which according to the sisters, is whats
due them as per the contract.
The lower court ruled in favor of Manuel and the Court of Appeals affirmed
the lower court.
The sisters then appealed before the Supreme Court where they argued
that there is no partnership between them and Manuel because the joint
venture agreement is void.
ISSUE: Whether or not there exists a partnership.
HELD: Yes. The joint venture agreement the sisters entered into with
Manuel is a partnership agreement whereby they agreed to contribute
property (their land) which was to be developed as a subdivision. While on
the other hand, though Manuel did not contribute capital, he is an industrial
partner for his contribution for general expenses and other costs.
Furthermore, the income from the said project would be divided according
to the stipulated percentage (60-40). Clearly, the contract manifested the
intention of the parties to form a partnership. Further still, the sisters
cannot invoke their right to the 60% value of the property and at the same
time deny the same contract which entitles them to it.
At any rate, the failure of the partnership cannot be blamed on the sisters,
nor can it be blamed to Manuel (the sisters on their appeal did not show
evidence as to Manuels fault in the failure of the partnership). The sisters
must then bear their loss (which is 60%). Manuel does not bear the loss of
the other 40% because as an industrial partner he is exempt from losses.
TORRES v. CA
FACTS: In 1969, sisters Antonia Torres and Emeteria Baring entered into a
joint venture agreement with Manuel Torres. Under the agreement, the
sisters agreed to execute a deed of sale in favor Manuel over a parcel of
land, the sisters received no cash payment from Manuel but the promise of
profits (60% for the sisters and 40% for Manuel) said parcel of land is to
be developed as a subdivision.
FACTS: It was established that Lim Tong Lim requested Peter Yao to engage
in commercial fishing with him and one Antonio Chua. The three agreed to
purchase two fishing boats but since they do not have the money they
borrowed from one Jesus Lim (brother of Lim Tong Lim). They again
borrowed money and they agreed to purchase fishing nets and other fishing
equipments. Now, Yao and Chua represented themselves as acting in behalf
of Ocean Quest Fishing Corporation (OQFC) they contracted with
Philippine Fishing Gear Industries (PFGI) for the purchase of fishing nets
amounting to more than P500k.
Manuel then had the title of the land transferred in his name and he
subsequently mortgaged the property. He used the proceeds from the
mortgage to start building roads, curbs and gutters. Manuel also contracted
an engineering firm for the building of housing units. But due to adverse
They were however unable to pay PFGI and so they were sued in their own
names because apparently OQFC is a non-existent corporation. Chua
admitted liability and asked for some time to pay. Yao waived his rights. Lim
Tong Lim however argued that hes not liable because he was not aware
that Chua and Yao represented themselves as a corporation; that the two
acted without his knowledge and consent.
ISSUE: Whether or not Lim Tong Lim is liable.
HELD: Yes. From the factual findings of both lower courts, it is clear that
Chua, Yao and Lim had decided to engage in a fishing business, which they
started by buying boats worth P3.35 million, financed by a loan secured
from Jesus Lim. In their Compromise Agreement, they subsequently
revealed their intention to pay the loan with the proceeds of the sale of the
boats, and to divide equally 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 1767. The contribution to
such fund need not be cash or fixed assets; it could be an intangible like
credit or industry. That the parties agreed that any loss or profit from the
sale and operation of the boats would be divided equally among them also
shows that they had indeed formed a partnership.
Lim Tong Lim cannot argue that the principle of corporation by estoppels
can only be imputed to Yao and Chua. Unquestionably, Lim Tong Lim
benefited from the use of the nets found in his boats, the boat which has
earlier been proven to be an asset of the partnership. Lim, Chua and Yao
decided to form a corporation. Although it was never legally formed for
unknown reasons, this fact alone does not preclude the liabilities of the
three as contracting parties in representation of it. Clearly, under the law
on estoppel, those acting on behalf of a corporation and those benefited by
it, knowing it to be without valid existence, are held liable as general
partners.
ROJAS v. MAGLANA
Facts: Maglana and Rojas executed their Articles of Co-Partnership called
Eastcoast Development Enterprises (EDE). It was a partnership with an
indefinite term of existence. Maglana shall manage the business affairs
while Rojas shall be the logging superintendant and shall manage the
logging operation. They shall share in all profits and loss equally. Due to
difficulties encountered they decided to avail of the sources of Pahamatong
as industrial partners. They again executed their Articles of Co-Partnership
under EDE. The term is 30 years. After sometime Pamahatong sold his
interest to Maglana and Rojas including equipment contributed. After
withdrawal of Pamahatong, Maglana and Rojas continued the partnership.
After 3 months, Rojas entered into a management contract with another
logging enterprise. He left and abandoned the partnership. He even
withdrew his equipment from the partnership and was transferred to CMS.
He never told Maglana that he will not be able to comply with the promised
contributions and he will not work as logging superintendent. Maglana then
told Rojas that the latter share will just be 20% of the net profits. Rojas took
funds from the partnership more than his contribution. Thus, Maglana
notified Rojas that he dissolved the partnership.
Ruling: It was not the intention of the partners to dissolve the first
partnership, upon the constitution of the second one, which they
unmistakably called additional agreement. Otherwise stated even during
the existence of the second partnership, all business transactions were
carried out under the duly registered articles. No rights and obligations
accrued in the name of the second partnership except in favor of
Pahamatong which was fully paid by the duly registered partnership.
that Zabat engaged in a competitor venture thus expelled him. The two had
Arsenio Reyes (husband of Nieves) replaced Zabat.
However, Santos accused the Spouses of not remitting the loans payments.
He argued that the couple were only his employees and there was a
special arrangement between him and Gragera. The trial court and the
Court of Appeals ruled against Santos.
Issue: Whether or not there was a partnership formed between Santos and
the Spouses Reyes
Held: YES. The original partnership with Zabat continued even after the
expulsion of the latter from the partnership because there was no intent to
dissolve the (partnership) relationship.
[Respondents] were industrial partners of [petitioner]. . . . Nieves herself
provided the initiative in the lending activities with Monte Maria. In
consonance with the agreement between appellant, Nieves and Zabat
(later replaced by Arsenio), [respondents] contributed industry to the
common fund with the intention of sharing in the profits of the partnership.
[Respondents] provided services without which the partnership would not
have [had] the wherewithal to carry on the purpose for which it was
organized and as such [were] considered industrial partners (Evangelista v.
Abad Santos, 51 SCRA 416 [1973]).
While concededly, the partnership between [petitioner,] Nieves and
Zabat was technically dissolved by the expulsion of Zabat
therefrom, the remaining partners simply continued the business
of the partnership without undergoing the procedure relative to
dissolution. Instead, they invited Arsenio to participate as a
partner in their operations. There was therefore, no intent to
dissolve the earlier partnership. The partnership between [petitioner,]
Nieves and Arsenio simply took over and continued the business of the
former partnership with Zabat, one of the incidents of which was the
lending operations with Monte Maria.
Facts: Bastida offered to assign to Menzi & Co. his contract with Phil Sugar
Centrals Agency and to supervise the mixing of the fertilizer and to obtain
other orders for 50 % of the net profit that Menzi & Co., Inc., might derive
therefrom. J. M. Menzi (gen. manager of Menzi & Co.) accepted the offer.
The agreement between the parties was verbal and was confirmed by the
letter of Menzi to the plaintiff on January 10, 1922. Pursuant to the verbal
agreement, the defendant corporation on April 27, 1922 entered into a
written contract with the plaintiff, marked Exhibit A, which is the basis of
the present action. Still, the fertilizer business as carried on in the same
manner as it was prior to the written contract, but the net profit that the
plaintiff herein shall get would only be 35%. The intervention of the plaintiff
was limited to supervising the mixing of the fertilizers in the bodegas of
Menzi. Prior to the expiration of the contract (April 27, 1927), the manager
of Menzi notified the plaintiff that the contract for his services would not be
renewed. Subsequently, when the contract expired, Menzi proceeded to
liquidate the fertilizer business in question. The plaintiff refused to agree to
this. It argued, among others, that the written contract entered into by the
parties is a contract of general regular commercial partnership, wherein
Menzi was the capitalist and the plaintiff the industrial partner.
Issue: Whether the relationship between the petitioner and Menzi is that of
partners?
Held: The relationship established between the parties was not that of
partners, but that of employer and employee, whereby the plaintiff was to
receive 35% of the net profits of the fertilizer business of Menzi in
compensation for his services for supervising the mixing of the fertilizers.
Neither the provisions of the contract nor the conduct of the parties prior or
subsequent to its execution justified the finding that it was a contract of
copartnership.
The written contract was, in fact, a continuation of the verbal agreement
between the parties, whereby the plaintiff worked for the defendant
corporation for one-half of the net profits derived by the corporation form
certain fertilizer contracts.
According to Art. 116 of the Code of Commerce, articles of association by
which two or more persons obligate themselves to place in a common fund
any property, industry, or any of these things, in order to obtain profit, shall
be commercial, no matter what it class may be, provided it has been
established in accordance with the provisions of the Code.
However in this case, there was no common fund. The business belonged to
Menzi & Co.
The plaintiff was working for Menzi, and instead of receiving a fixed salary,
he was to receive 35% of the net profits as compensation for his services.
took effect on August 30, 1950. A review of the record persuades us that
the Court of Appeals correctly reversed the decision of the trial court. The
evidence presented by petitioners falls short of the quantum of proof
required to establish a partnership.
It is indeed odd, if not unnatural, that despite the forty years the
partnership was allegedly in existence, Tan Eng Kee never asked for an
accounting. The essence of a partnership is that the partners share in the
profits and losses. Each has the right to demand an accounting as long as
the partnership exists. A demand for periodic accounting is evidence of a
partnership. During his lifetime, Tan Eng Kee appeared never to have made
any such demand for accounting from his brother.
This brings us to the matter of Exhibits 4 to 4-U for private
respondents, consisting of payrolls purporting to show that Tan Eng Kee was
an ordinary employee of Benguet Lumber, as it was then called. Exhibits
4 to 4-U in fact shows that Tan Eng Kee received sums as wages of an
employee.In connection therewith, Article 1769 of the Civil Code provides:
Kee and Tan Eng Lay intended to divide the profits of the business between
themselves, which is one of the essential features of a partnership.
Nevertheless, petitioners would still want us to infer or believe the alleged
existence of a partnership from this set of circumstances: that Tan Eng Lay
and Tan Eng Kee were commanding the employees; that both were
supervising the employees; that both were the ones who determined the
price at which the stocks were to be sold; and that both placed orders to
the suppliers of the Benguet Lumber Company. They also point out that the
families of the brothers Tan Eng Kee and Tan Eng Lay lived at the Benguet
Lumber Company compound, a privilege not extended to its ordinary
employees.
Even the aforesaid circumstances, when taken together are not persuasive
indicia of a partnership. They only tend to show that Tan Eng Kee was
involved in the operations of Benguet Lumber, but in what capacity is
unclear. We cannot discount the likelihood that as a member of the family,
he occupied a niche above the rank-and-file employees. He would have
enjoyed liberties otherwise unavailable were he not kin, such as his
residence in the Benguet Lumber Company compound. He would have
moral, if not actual, superiority over his fellow employees, thereby entitling
him to exercise powers of supervision. It may even be that among his
duties is to place orders with suppliers. Again, the circumstances proffered
by petitioners do not provide a logical nexus to the conclusion desired;
these are not inconsistent with the powers and duties of a manager, even
in a business organized and run as informally as Benguet Lumber Company.
Facts: The petitioner and private respondents are brothers and sisters who
are co-owners of certain lots at the in Quezon City which were then being
leased to SHELL. They agreed to open and operate a gas station thereat to
be known as Estanislao Shell Service Station with an initial investment of
PhP15,000.00 to be taken from the advance rentals due to them from
SHELL for the occupancy of the said lots owned in common by them. A
joint affidavit was executed by them on April 11, 1966. The respondents
agreed to help their brother, petitioner therein, by allowing him to operate
and manage the gasoline service station of the family. In order not to run
counter to the companys policy of appointing only one dealer, it was
agreed that petitioner would apply for the dealership.
Respondent
Remedios helped in co-managing the business with petitioner from May
1966 up to February 1967.
On May 1966, the parties entered into an Additional Cash Pledge
Agreement with SHELL wherein it was reiterated that the P15,000.00
advance rental shall be deposited with SHELL to cover advances of fuel to
petitioner as dealer with a proviso that said agreement cancels and
supersedes the Joint Affidavit.
For some time, the petitioner submitted financial statement regarding the
operation of the business to the private respondents, but thereafter
petitioner failed to render subsequent accounting. Hence , the private
respondents filed a complaint against the petitioner praying among others
that the latter be ordered:
(1)
To execute a public document embodying all the provisions of the
partnership agreement they entered into;
(2)
To render a formal accounting of the business operation veering
the period from May 6, 1966 up to December 21, 1968, and from January 1,
1969 up to the time the order is issued and that the same be subject to
proper audit;
(3)
To pay the plaintiffs their lawful shares and participation in the net
profits of the business; and
(4)
SY v. CA
FACTS: Sometime in 1958, private respondent Jaime Sahot[5] started
working as a truck helper for petitioners family-owned trucking business
named Vicente Sy Trucking. In 1965, he became a truck driver of the same
family business, renamed T. Paulino Trucking Service, later 6Bs Trucking
Corporation in 1985, and thereafter known as SBT Trucking Corporation
since 1994. Throughout all these changes in names and for 36 years,
private respondent continuously served the trucking business of
petitioners. When Sahot was 59 years old, he incurred several absences
due to various ailments. Particularly causing him pain was his left thigh,
which greatly affected the performance of his task as a driver. He inquired
about his medical and retirement benefits with the Social Security System
(SSS) on April 25, 1994, but discovered that his premium payments had not
been remitted by his employer.Sahot filed a week-long leave to get medical
attention. He was treated for EOR, presleyopia, hypertensive retinopathy G
II and heart enlargement. Because of such, Belen Paulino of the SBT
Trucking Service management told him to file a formal request for
extension of his leave. When Sahot applied for an extended leave, he was
threatened of termination of employment should he refuse to go back to
work. Eventually, Sahot was dismissed from employment which prompted
the latter to file an illegal dismissal case with the NLRC. For their part,
petitioners admitted they had a trucking business in the 1950s but denied
employing helpers and drivers. They contend that private respondent was
not illegally dismissed as a driver because he was in fact petitioners
industrial partner. They add that it was not until the year 1994, when SBT
Trucking Corporation was established, and only then did respondent Sahot
become an employee of the company, with a monthly salary that reached
P4,160.00 at the time of his separation. The NLRC and the CA ruled that
Sahot was an employee of the petitioner.
RULING: No. Article 1767 of the Civil Code states that in a contract of
partnership two or more persons bind themselves to contribute money,
property or industry to a common fund, with the intention of dividing the
profits among themselves. Not one of these circumstances is present in this
case. No written agreement exists to prove the partnership between the
parties. Private respondent did not contribute money, property or industry
for the purpose of engaging in the supposed business. There is no proof
that he was receiving a share in the profits as a matter of course, during
the period when the trucking business was under operation. Neither is
there any proof that he had actively participated in the management,
administration and adoption of policies of the business. Thus, the NLRC and
the CA did not err in reversing the finding of the Labor Arbiter that private
respondent was an industrial partner from 1958 to 1994. On this point, the
Court affirmed the findings of the appellate court and the NLRC. Private
respondent Jaime Sahot was not an industrial partner but an employee of
petitioners from 1958 to 1994. The existence of an employer-employee
relationship is ultimately a question of fact and the findings thereon by the
NLRC, as affirmed by the Court of Appeals, deserve not only respect but
finality when supported by substantial evidence. Substantial evidence is
such amount of relevant evidence which a reasonable mind might accept
as adequate to justify a conclusion.
2.) Elfledo ran the affairs of the partnership, wielding absolute control,
power and authority, without any intervention or opposition whatsoever
from any of petitioners herein;
FACTS: In 1980, the heirs of Jose Lim alleged that Jose Lim entered into a
partnership
agreement
with
Jimmy
Yu
and
Norberto
Uy. The
three contributed P50,000.00 each and used the funds to purchase a truck
to start their trucking business. A year later however, Jose Lim died. The
eldest son of Jose Lim, Elfledo Lim, took over the trucking business and
under his management, the trucking business prospered. Elfledo was able
to but real properties in his name. From one truck, he increased it to 9
trucks, all trucks were in his name however. He also acquired other motor
vehicles in his name.
In 1993, Norberto Uy was killed. In 1995, Elfledo Lim died of a heart attack.
Elfledos wife, Juliet Lim, took over the properties but she intimated to
Jimmy and the heirs of Norberto that she could not go on with the business.
So the properties in the partnership were divided among them.
Now the other heirs of Jose Lim, represented by Elenito Lim, required Juliet
to do an accounting of all income, profits, and properties from the estate of
Elfledo Lim as they claimed that they are co-owners thereof. Juliet refused
hence they sued her.
The heirs of Jose Lim argued that Elfledo Lim acquired his properties from
the partnership that Jose Lim formed with Norberto and Jimmy. In court,
Jimmy Yu testified that Jose Lim was the partner and not Elfledo Lim.
The heirs testified that Elfledo was merely the driver of Jose Lim.
ISSUE: Who is the partner between Jose Lim and Elfledo Lim?
HELD: It is Elfledo Lim based on the evidence presented regardless of
Jimmy Yus testimony in court that Jose Lim was the partner. If Jose Lim was
the partner, then the partnership would have been dissolved upon his
death (in fact, though the SC did not say so, I believe it should have been
dissolved upon Norbertos death in 1993). A partnership is dissolved upon
the death of the partner. Further, no evidence was presented as to the
But at any rate, the Supreme Court noted that based on the functions
performed by Elfledo, he is the actual partner.
The following circumstances tend to prove that Elfledo was himself the
partner of Jimmy and Norberto:
1.) Cresencia testified that Jose gave Elfledo P50,000.00, as share in the
partnership, on a date that coincided with the payment of the initial capital
in the partnership;
3.) all of the properties, particularly the nine trucks of the partnership, were
registered in the name of Elfledo;
4.) Jimmy testified that Elfledo did not receive wages or salaries from the
partnership, indicating that what he actually received were shares of the
profits of the business; and
5.) none of the heirs of Jose, the alleged partner, demanded periodic
accounting from Elfledo during his lifetime. As repeatedly stressed in the
case of Heirs of Tan Eng Kee, a demand for periodic accounting is evidence
of a partnership.
Furthermore, petitioners failed to adduce any evidence to show that the
real and personal properties acquired and registered in the names of
Elfledo and Juliet formed part of the estate of Jose, having been derived
from Joses alleged partnership with Jimmy and Norberto.
Elfledo was not just a hired help but one of the partners in the trucking
business, active and visible in the running of its affairs from day one until
this ceased operations upon his demise. The extent of his control,
administration and management of the partnership and its business, the
fact that its properties were placed in his name, and that he was not paid
salary or other compensation by the partners, are indicative of the fact that
Elfledo was a partner and a controlling one at that. It is apparent that the
other partners only contributed in the initial capital but had no say
thereafter on how the business was ran. Evidently it was through Elfredos
efforts and hard work that the partnership was able to acquire more trucks
and otherwise prosper. Even the appellant participated in the affairs of the
partnership by acting as the bookkeeper sans salary.
ARBES v. POLISTICO
FACTS:
This is an action to bring about liquidation of the funds and property of the
association called "Turnuhan Polistico & Co." The plaintiffs were members or
shareholders, and the defendants were designated as president-treasurer,
directors and secretary of said association.
This case is brought for 2nd time. In the 1st one, the court held then that in
an action against the officers of a voluntary association to wind up its
affairs and enforce an accounting for money and property in their
possessions, it is not necessary that all members of the association be
made parties to the action. The court appointed commissioner of Insular
Auditor's Office, to examine all the books, documents, and accounts of
"Turnuhan Polistico & Co.," and to receive whatever evidence.
Commissioner's report show a balance of P24, 607.80 cash on hand.
Despite defendants objection to the report, the trial court rendered
judgment holding said association is unlawful. And sentenced defendants
jointly and severally to return the amount and documents to the plaintiffs
and members of the association. The Appellant alleged that the association
being unlawful, some charitable institution to whom the partnership funds
may be ordered to be turned over, should be included, as a party
defendant. Referring to Article 1666 of the Civil Code which provides that
A partnership must have a lawful object, and must be established for the
common benefit of the partners. When the dissolution of an unlawful
partnership is decreed, the profits shall be given to charitable institutions
of the domicile of the partnership, or, in default of such, to those of the
province.
The article cited above permits no action for the purpose of obtaining the
earnings made by the unlawful partnership, during its existence as result of
the business in which it was engaged, because for the purpose, as Manresa
remarks, the partner will have to base his action upon the partnership
contract, which is to annul and without legal existence by reason of its
unlawful object; and it is self-evident that what does not exist cannot be a
cause of action. Hence, paragraph 2 of the same article provides that when
the dissolution of the unlawful partnership is decreed, the profits cannot
inure to the benefit of the partners, but must be given to some charitable
institution. The profits are so applied, and not the contributions, because
this would be an excessive and unjust sanction for, as we have seen, there
is no reason, in such a case, for depriving the partner of the portion of the
capital that he contributed, the circumstances of the two cases being
entirely different.
Art. 1807. Every partner must account to the partnership for any benefit,
and hold as trustee for it any profits derived by him without the consent of
the other partners from any transaction connected with the formation,
conduct, or liquidation of the partnership or from any use by him of its
property.
WOODHOUSE v. HALILI
When both parties went back to the Philippines, the bottling plant began its
operation. At first, plaintiff was given advances, on account of the profits,
and allowances which however ceased after two months. Moreover, when
plaintiff demanded that the partnership papers be executed, defendant
refused to do so and instead suggest that they just enter into a settlement.
As no settlement was reached, the plaintiff filed a complaint in the CFI.
In the CFI, plaintiff asks for execution of the contract of partnership,
accounting of the profits and a share thereof of 30 percent. Defendant on
his defense claims that plaintiff misrepresented himself that he was about
to become the owner of an exclusive bottling franchise when in fact
franchise was exclusively given to defendant, and that the plaintiff failed to
contribute to the exclusive franchise of the partnership. CFI ordered
defendant to render an accounting of the profits of the business and to pay
plaintiff 15 percent thereof. But it held that the execution of the contract
could not be enforced and the defense of fraud was not proved. Unsatisfied
with this ruling, both parties appealed to the SC.
b) Article 1270 of the Spanish Civil Code distinguished two kinds of fraud,
causal fraud, which may be a ground for the annulment of a contract, and
the incidental fraud, which only renders the party who employs it liable for
damages.
As founded by the SC the misrepresentation of plaintiff does not amount to
causal fraud because it was not the principal inducement that led the
plaintiff to enter into the partnership agreement. As it was already noted,
both parties expressly agreed that they shall form a partnership.
Lastly, the SC upheld the ruling of the trial court that the defendant may
not be compelled against his will to carry out the partnership. The law
FACTS: Aurelio and Eduardo are brothers. In 1973, Aurelio alleged that
Eduardo entered into a contract of partnership with him. Aurelio showed as
evidence a letter sent to him by Eduardo that the latter is
allowing Aurelio to manage their family business (if Eduardos away) and in
exchange thereof he will be giving Aurelio P1 million or 10% equity,
whichever is higher. A memorandum was subsequently made for the said
partnership agreement. The memorandum this time stated that in
exchange ofAurelio, who just got married, retaining his share in the family
business (movie theatres, shipping and land development) and some other
immovable properties, he will be given P1 Million or 10% equity in all these
businesses and those to be subsequently acquired by them whichever is
greater.
In 1992 however, the relationship between the brothers went sour. And
so Aureliodemanded an accounting and the liquidation of his share in the
partnership. Eduardo did not heed and so Aurelio sued Eduardo.
ISSUE: Whether or not there exists a partnership.
HELD: No. The partnership is void and legally nonexistent. The
documentary evidence presented by Aurelio, i.e. the letter from Eduardo
and the Memorandum, did not prove partnership.
The 1973 letter from Eduardo on its face, contains typewritten entries,
personal in tone, but is unsigned and undated. As an unsigned document,
there can be no quibbling that said letter does not meet the public
instrumentation requirements exacted under Article 1771 (how partnership
is constituted) of the Civil Code. Moreover, being unsigned and doubtless
referring to a partnership involving more than P3,000.00 in money or
property, said letter cannot be presented for notarization, let alone
registered with the Securities and Exchange Commission (SEC), as called
for under the Article 1772 (capitalization of a partnership) of the Code. And
inasmuch as the inventory requirement under the succeeding Article 1773
goes into the matter of validity when immovable property is contributed to
the partnership, the next logical point of inquiry turns on the nature of
Aurelios contribution, if any, to the supposed partnership.
The Memorandum is also not a proof of the partnership for the same is not
a public instrument and again, no inventory was made of the immovable
property and no inventory was attached to the Memorandum. Article 1773
ART. 1299. Any partner shall have the right to a formal account as to
partnership affairs:
On December 17, 1963 herein respondent filed suit against the three other
partners, alleging that the partnership, which was also made a partydefendant, had been paying dividends to the partners except to her; and
that notwithstanding her demands the defendants had refused and
continued to refuse to let her examine the partnership books or to give her
information regarding the partnership affairs or to pay her any share in the
dividends declared by the partnership
In the case at hand, the company is estopped from denying Abad Santos as
an industrial partner because it has been 8 years and the company never
corrected their agreement in order to show their true intentions. The
company never bothered to correct those up until Abad Santos filed a
complaint.
Facts: The petitioner asks for the reversal of the decision of the then
Intermediate Appellate Court in AC-G.R. No. CV-00881 which affirmed the
decision of the then Court of First Instance of Manila, Branch II in Civil Case
No. 116725 declaring private respondent Leung Yiu a partner of petitioner
Dan Fue Leung in the business of Sun Wah Panciteria and ordering the
petitioner to pay to the private respondent his share in the annual profits of
the said restaurant. This case originated from a complaint filed by
respondent Leung Yiu with the then Court of First Instance of Manila, Branch
II to recover the sum equivalent to twenty-two percent (22%) of the annual
profits derived from the operation of Sun Wah Panciteria since October,
1955 from petitioner Dan Fue Leung. The Sun Wah Panciteria, a restaurant,
located at Florentino Torres Street, Sta. Cruz, Manila, was established
sometime in October, 1955. It was registered as a single proprietorship and
its licenses and permits were issued to and in favor of petitioner Dan Fue
Leung as the sole proprietor. Respondent Leung Yiu adduced evidence
during the trial of the case to show that Sun Wah Panciteria was actually a
partnership and that he was one of the partners having contributed
Ruling: In essence, the private respondent alleged that when Sun Wah
Panciteria was established, he gave P4,000.00 to the petitioner with the
understanding that he would be entitled to twenty-two percent (22%) of the
annual profit derived from the operation of the said panciteria. These
allegations, which were proved, make the private respondent and the
petitioner partners in the establishment of Sun Wah Panciteria because
Article 1767 of the Civil Code provides that "By the contract of partnership
two or more persons bind themselves to contribute money, property or
industry to a common fund, with the intention of dividing the profits among
themselves".Therefore, the lower courts did not err in construing the
complaint as one wherein the private respondent asserted his rights as
partner of the petitioner in the establishment of the Sun Wah Panciteria,
notwithstanding the use of the term financial assistance therein.
FACTS: Tan alleged that she is the widow of Tee Hoon Lim Po Chuan, who
was a partner in the commercial partnership, Glory Commercial Company
with Antonio Lim Tanhu and Alfonso Ng Sua".
Defendant Antonio Lim Tanhu, Alfonso Leonardo Ng Sua, Lim Teck Chuan,
and Eng Chong Leonardo, through fraud and machination, took actual and
active management of the partnership and although Tee Hoon Lim Po
Chuan was the manager of Glory Commercial Company, defendants
managed to use the funds of the partnership to purchase lands and
buildings in the cities of Cebu, Lapulapu, Mandaue, and the municipalities
of Talisay and Minglanilla.
She alleged in her complaint that after the death of Tee Hoon Lim Po Chuan,
the defendants, without liquidation, continued the business of Glory
Commercial Company, by purportedly organizing a corporation known as
the Glory Commercial Company, Incorporated and sometime in the month
of November, 1967, defendants, particularly Antonio Lim Tanhu, by means
of fraud deceit, and misrepresentations did then and there, induce and
convince her to execute a quitclaim of all her rights and interests, in the
assets of the partnership of Glory Commercial Company.
Thereafter, in the year 1968-69, the defendants who had earlier promised
to liquidate the aforesaid properties and assets in favor, among others of
plaintiff and until the middle of the year 1970 when the plaintiff formally
demanded from the defendants the accounting of real and personal
properties of the Glory Commercial Company, defendants refused and
stated that they would not give the share of the plaintiff.
ISSUE: Whether Tan has a right over the liquidated properties of the
partnership
HELD: No, Tan has no right over the liquidated properties of the
partnership
The Supreme Court held that there is no alternative but to hold that
plaintiff Tan Put's allegation that she is the widow of Tee Hoon Lim Po Chuan
has not been satisfactorily established and that, on the contrary, the
evidence on record convincingly shows that her relation with said deceased
was that of a common-law wife.
Moreover, the Supreme Court said that the lower courts committed an
error by awarding 1/3 of the partnership properties to Tan because there
has been no liquidation proceedings yet. And if there has not yet been any
liquidation of the partnership, the only right plaintiff could have would be to
what might result after much liquidation to belong to the deceased partner
(her alleged husband) and before this is finished, it is impossible to
determine, what rights or interest, if any the deceased had.
RAMNANI v. CA
Justice and equity dictate that the two share equally the fruit of their joint
investment and efforts. Perhaps this Solomonic solution may pave the way
towards their reconciliation. Both would stand to gain. No one would end up
the loser. After all, blood is thicker than water.
FACTS: The National Rice and Corn Corporation (Naric) had on stock 8000
metric tons of corn which it could not dispose of due to its poor quality.
Naric called for bids for the purchase of the corn and rice. But precisely
because of the poor quality of the corn, a direct purchase of said corn even
with the privilege of importing commodities did not attract good offers.
Davao Merchandising Corporation (Damerco) came in with its offer to act
as agent in the exportation of the corn, with the agent answering for the
An ocular inspection was held by Lee. Lee informed Antonio that he already
purchased the property and had made a down payment ofP1M. The
remaining balance of P1.2M was to be paid upon the approval of the
incorporation papers of the corporation he was organizing by the SEC.
According to Antonio, Lee asked her if they had already received their
commission. She answered no, and Lee expressed surprise over this.
Since the sale of the property was consummated, the respondents asked
from the petitioners their commission, or 5% of the purchase price. The
petitioners refused to pay and offered a measly sum of P5,000.00 each.
Hence, the present action.
Medranos defense: Borbon and Antonio did not perform any act to
consummate the sale. The petitioners pointed out that the respondents (1)
did not verify the real owner of the property; (2) never saw the property in
question; (3) never got in touch with the registered owner of the property;
and (4) neither did they perform any act of assisting their buyer in having
the property inspected and verified.
Issue: WON the plaintiffs are entitled to any commission for the sale of the
subject property? YES
Held: The respondents are indeed the procuring cause of the sale. If not for
the respondents, Lee would not have known about the mango plantation
being sold by the petitioners. The sale was consummated. The bank had
profited from such transaction. It would certainly be iniquitous if the
respondents would not be rewarded their commission pursuant to the letter
of authority.
Procuring cause = the proximate cause. The term procuring cause, in
describing a brokers activity, refers to a cause originating a series of
events which, without break in their continuity, result in accomplishment of
prime objective of the employment of the broker producing a purchaser
ready, willing and able to buy real estate on the owners terms.
The evidence on record shows that the respondents were instrumental in
the sale of the property to Lee. Without their intervention, no sale could
have been consummated. They were the ones who set the sale of the
subject land in motion. While the letter-authority issued in favor of the
respondents was non-exclusive, no evidence was adduced to show that
there were other persons, aside from the respondents, who informed Lee
about the property for sale. When there is a close, proximate and causal
connection between the brokers efforts and the principals sale of his
property, the broker is entitled to a commission.
In the absence of fraud, irregularity or illegality in its execution, such letterauthority serves as a contract, and is considered as the law between the
four (4) other co-heirs, namely: Isabelita on the basis of a special power of
attorney executed on September 28, 1991 and also for Milagros, Minerva,
and Zenaida but without their apparent written authority. The deed of sale
was also not notarized. When Eufemia and her co-heirs drafted an extrajudicial settlement of estate to facilitate the transfer of the title to the
Pahuds, Virgilio refused to sign it. Virgilios co-heirs filed a complaint for
judicial partition of the subject property before the RTC. In the course of the
proceedings for judicial partition, a Compromise Agreement 17 was signed
with seven (7) of the co-heirs agreeing to sell their undivided shares to
Virgilio for P700,000.00.
The trial court did however, not approve compromise agreement. Eufemia
and her six (6) co-heirs, refused to sign the agreement because he knew of
the previous sale made to the Pahuds. On December 1, 1994, Eufemia
acknowledged having received P700,000.00 from Virgilio. Virgilio then sold
the entire property to spouses Isagani Belarmino and Leticia Ocampo
(Belarminos). Belarminos immediately constructed a building on the subject
property. Pahuds confronted Eufemia who confirmed to them that Virgilio
had sold the property to the Belarminos. Pahuds filed a complaint in
intervention in the pending case for judicial partition.
After trial, the RTC upheld the validity of the sale to petitioners
-sale of the 7/8 portion of the property cover
-declaring the defendant Virgilio San Agustin and the Third-Party
defendants spouses Isagani and Leticia Belarmino as in bad faith in buying
the portion of the property already sold by the plaintiffs
Respondents appealed the decision to the CA arguing, in the main, that the
sale made by Eufemia for and on behalf of her other co-heirs to the Pahuds
should have been declared void and inexistent for want of a written
authority. The CA REVERSED and SET ASIDE the trial court decision, and a
new one entered, as follows:
Declaring the sale of appellant Virgilio San Agustin to appellants
spouses, Isagani and Leticia Belarmino, as valid and binding
PAHUD v. CA
FACTS: Spouses Pedro San Agustin and Agatona Genil were able to acquire
a 246-square meter parcel of land situated in Barangay Anos. Both died
intestate, survived by their eight (8) children: respondents Eufemia, Raul,
Ferdinand, Zenaida, Milagros, Minerva, Isabelita and Virgilio. In 1992,
Eufemia, Ferdinand and Raul executed a Deed of Absolute Sale of
Undivided Shares conveying in favor of petitioners (the Pahuds, for brevity)
their respective shares from the lot they inherited from their deceased
parents for P525,000.00- Eufemia also signed the deed on behalf of her
Issue: The status of the sale of the subject property by Eufemia and her coheirs to the Pahuds
Ruling: Article 1874 of the Civil Code plainly provides:
Art. 1874. When a sale of a piece of land or any interest therein is
through an agent, the authority of the latter shall be in writing;
otherwise, the sale shall be void.
Isagani Belarmino and Leticia Ocampo is valid only with respect to the 1/8
portion of the subject property.
For the principal to confer the right upon an agent to sell real estate, a
power of attorney must so express the powers of the agent in clear and
unmistakable language
Based on the foregoing, it is not difficult to conclude, in principle, that the
sale made by Eufemia, Isabelita and her two brothers to the Pahuds
sometime in 1992 should be valid only with respect to the 4/8 portion of the
subject property. The sale with respect to the 3/8 portion, representing the
shares of Zenaida, Milagros, and Minerva, is void because Eufemia could
not dispose of the interest of her co-heirs in the said lot absent any written
authority from the latter, as explicitly required by law. This was, in fact, the
ruling of the CA.
While the sale with respect to the 3/8 portion is void by express provision of
law and not susceptible to ratification, 31 we nevertheless uphold its validity
on the basis of the common law principle of estoppel.
Art. 1431. Through estoppel an admission or representation is rendered
conclusive upon the person making it, and cannot be denied or disproved
as against the person relying thereon.
True, at the time of the sale to the Pahuds, Eufemia was not armed with the
requisite special power of attorney to dispose of the 3/8 portion of the
property.
However, they admitted that they had indeed sold 7/8 of the property to
the Pahuds sometime in 1992. Thus, the previous denial was superseded, if
not accordingly amended, by their subsequent admission. They opted to
remain silent and left the task of raising the validity of the sale as an issue
to their co-heir, Virgilio, who is not privy to the said transaction
By their continued silence, Zenaida, Milagros and Minerva have caused the
Pahuds to believe that they have indeed clothed Eufemia with the authority
to transact on their behalf. Clearly, the three co-heirs are now estopped
from impugning the validity of the sale from assailing the authority of
Eufemia to enter into such transaction.
Belaraminos cannot argue that they purchased the property in good faith.
The sale made by respondent Virgilio San Agustin to respondent spouses
and conditions set out by Araneta, Inc., e.g., that the price per share is
P1,500.00. when petitioners' authority to sell was subsisting, if at all,
petitioners had nothing to show that they actively served their principal's
interests, pursued to sell the shares in accordance with their principal's
terms and conditions, and performed substantial acts that proximately and
causatively led to the consummation of the sale to Stanford of Araneta,
Inc.'s 9,800 shares in Architects'.The Court of Appeals cannot be faulted for
emphasizing the lapse of more than one (1) year and five (5) months
between the expiration of petitioners' authority to sell and the
consummation of the sale to Stanford, to be a significant index of
petitioners' non-participation in the really critical events leading to the
consummation of said sale.
The Court ruled in favor of the respondent, with the CA affirming the RTC
decision. Hence, the appeal.
Campos Jr., J.
FACTS: The petitioner in this case is the owner of a parcel of land and
building which was leased to the City of Manila and was used by Claro M.
Recto High school. Respondent here, Salvador Saligumba, was the agent of
the petitioner who negotiated with the city for the sale of the said property.
HELD: It is to be noted that the ordinance was approved on April 26, 1968
when private respondent's authorization was still in force. Moreover, the
approval by the City Mayor came only three days after the expiration of
private respondent's authority. It is also worth emphasizing that from the
records, the only party given a written authority by petitioner to negotiate
the sale from July 5, 1966 to May 14, 1968 was private respondent. When
there is a close, proximate and causal connection between the agent's
efforts and labor and the principal's sale of his property, the agent is
entitled to a commission. Private respondent is the efficient procuring
cause for without his efforts, the municipality would not have anything to
pass and the Mayor would not have anything to approve. The SC agrees
with respondent Court that the City of Manila ultimately became the
purchaser of petitioner's property mainly through the efforts of private
respondent. Decision of the RTC is affirmed.
consider buying them for her own use and not to sell them on commission
basis, and that she would inform Suarez of such decision before she goes
back to Cebu. She also said that since she was not yet ready to buy, she
asked Suarez to prepare a paper for her to sign and that she signed said
document on its upper portion and not at the bottom where a space was
provided for the signature of the person receiving the jewelry. Before
departing, Lim informed Suarez that she was no longer interested in buying
the jewelry and the latter instructed her to give them to Nadera which the
former allegedly did. Petitioner asserts that she never received the jewelry
in trust or on commission basis since the real agreement between them
was a sale on credit.
Issue: Whether or not the real transaction between Lim and Suarez was a
contract of agency to sell on commission basis YES
According to the document, said lot must be sold for P2 per sq. m. Gregorio
is entitled to 5% commission on the total price if the property is sold (1) by
Vicente or by anyone else during the 30-day duration of the agency or (2)
by Vicente within 3 months from the termination of the agency to a
purchaser to whom it was submitted by Gregorio during the effectivity of
the agency with notice to Vicente. Gregorio Domingo received P1,000 from
Oscar de Leon as gift or propina. Oscar gave him said amount after
Gregorio succeeded in persuading Vicente to accept his offer to buy the lot
for P1.20 instead of P2.
ISSUE: WON Gregorios act of accepting the gift or propina from Oscar
constitutes a fraud which would cause the forfeiture of his 5% commission
[YES]
HELD: Gregorio Domingo as the broker, received a gift or propina from the
prospective buyer Oscar de Leon, without the knowledge and consent of his
principal, Vicente Domingo. His acceptance of said substantial monetary
gift corrupted his duty to serve the interests only of his principal and
undermined his loyalty to his principal, who gave him partial advance of
P3000 on his commission. As a consequence, instead of exerting his best to
persuade his prospective buyer to purchase the property on the most
advantageous terms desired by his principal, Gregorio Domingo, succeeded
in persuading his principal to accept the counter-offer of the prospective
buyer to purchase the property at P1.20 per sq. m.
The duties and liabilities of a broker to his employer are essentially those
which an agent owes to his principal.
An agent who takes a secret profit in the nature of a bonus, gratuity or
personal benefit from the vendee, without revealing the same to his
principal, the vendor, is guilty of a breach of his loyalty to the principal and
forfeits his right to collect the commission from his principal, even if the
principal does not suffer any injury by reason of such breach of fidelity, or
that he obtained better results or that the agency is a gratuitous one, or
that usage or custom allows it.
Philippine Health-Care Providers, Inc. v. Estrada
G.R. No. 171052
FACTS:
Makasiar, J.
FACTS: Vicente Domingo granted to Gregorio Domingo, a real estate
broker, the exclusive agency to sell his Lot No. 883, Piedad Estate in a
document. Said lot has an area of 88,477 sq. m.
agent
receives a commission upon
the successful conclusion of a sale
broker
earns his pay merely by bringing the buyer and
the seller together, even if no sale is eventually made
"procuring cause" in describing a brokers activity
HELD: NO, because his authority as agent does not grant such powers (a
special power of attorney is required);
YES, because this case falls squarely under the general law on obligations
and contracts.
RATIO: A perusal of the Special Power of Attorney would show that DIC
(represented by third-party defendant Austria) and Guevarra intended to
enter into a principal-agent relationship. Despite the word special in the
title of the document, the contents reveal that what was constituted was
actually a general agency. [Refer to the original case for the said contract
stipulations]
The instruction of DIC as the principal could not be any clearer. Guevarra
was authorized to pay the claim of the insured, but the payment shall come
from the revolving fund or collection in his possession.
Having deviated from the instructions of the principal, the expenses that
Guevarra incurred in the settlement of the claims of the insured may not be
reimbursed from DIC.
Article 1918, Civil Code: The principal is not liable for the expenses incurred
by the agent in the following cases:
(1) If the agent acted in contravention of the principals instructions, unless
the latter should wish to avail himself of the benefits derived from the
contract;
xxx xxx xxx
HOWEVER, while the law on agency prohibits respondent Guevarra from
obtaining reimbursement, his right to recover may still be justified under
the general law on obligations and contracts.
Article 1236, second paragraph, Civil Code, provides: Whoever pays for
another may demand from the debtor what he has paid, except that if he
paid without the knowledge or against the will of the debtor, he can recover
only insofar as the payment has been beneficial to the debtor.
CMS Logging v. CA (1992; Nocon, J.)
Facts:
1.
2.
a.
3.
4.
5.
Issue:
1.
2.
Held/Ratio:
1.
2.
c.
of his clients, the Delta Motors, Inc. in the amount of P4.4 Million from
which he was entitled to a commission of 32%. However, Valenzuela did not
receive his full commission which amounted to P1.6 Million from the P4.4
Million insurance coverage of the Delta Motors. In 1977,Philamgen started
to become interested in and expressed its intent to share in the commission
due Valenzuela on a fifty-fifty basis. Valenzuela refused. Philamgen insisted
on the sharing of the commission with Valenzuela. On June 16,1978,
Valenzuela firmly reiterated his objection to the proposals of respondents.
Because of the refusal of Valenzuela, Philamgen took drastic action against
Valenzuela. All of these acts resulted in the decline of his business as an
insurance agent. Then on December 27, 1978, Philamgen terminated the
General Agency Agreement of Valenzuela. Thus, Valenzuela filed a
complaint against Philamgen. The trial court ruled in favor Valenzuela and
ordered his reinstatement. On appeal, the Court of Appeals modified the
judgment in favor of Philamgen. Hence, this petition.
Facts: The late Eduardo Ybaez, the owner of a 1000 square meter lot in
Cebu City entered into an agency agreement with respondent Florencio
Saban. Under the agency agreement, Ybaez authorized Saban to look for a
buyer of the lot for P200,000 and to mark up the selling price to include the
amounts needed for payment of taxes, transfer of title and other expenses
incident to the sale, as well as Sabans commission for the sale. Through
Sabans effort, Ybaez and his wife were able to sell the lot to petitioner
Genevieve Lim and the spouses Benjamin and Lourdes Lim. The price
indicated in the Deed of Absolute Sale was P200,000, however, it appears
that the parties agreed to purchase the lot for P600,000 inclusive of taxes
and other expenses of the sale. Lim remitted to Saban the amounts of
P113,257.00 for the payment of taxes as well as P50,000 as brokers
commission. Lim also issued in the name of Saban four postdated checks in
the aggregate amount of P236,743.00. Subsequently, Ybaez sent letter to
him convincing her to cancel all the checks she issued in the name of
Saban and pay directly to him. Saban filed a complaint for the collection of
sum of money and damages against Ybaez and Lim with the RTC of Cebu
City. Saban alleged that Ybaez connived with Lim to deprive him of his
sales commission by withholding the payment of the checks. Ybaez for his
part claimed that Saban was not entitled to any commission because he
concealed the actual selling price from him and because he was not a
licensed broker. Ybaez died during the pendency of the case. The case
was dismissed with respect to Ybaez and only the complaint against Lim
was continued. The RTC of Cebu dismissed the complaint of Saban. On
appeal, the Court of Appeals ruled that the revocation of the contract of
agency by Ybaez was invalid because the agency was coupled with
interest and Ybaez effected the revocation in bad faith in order to deprive
Saban of his commission. Not satisfied with the decision of the Court of
Appeals, Lim filed the present petition. She further contends that she
should not be liable for Ybaez debt to Saban as she was not a party to the
contract of agency between them.
Issues: (1) Whether or not the contract of agency was revoked. NO
(2) Whether or not the contract of agency was coupled with interest. NO
Ruling: (1) The agency was not revoked since Ybaez requested that Lim
to make stop payment orders for the checks issued to Saban only after the
consummation of the sale. At that time, Saban had already performed his
obligation as Ybaezs agent when, through Sabans efforts, Ybaez
executed the Deed of Absolute Sale of the lot with Lim and Spouses Lim. To
deprive Saban of his commission subsequent to the sale which was
consummated through his efforts would be a breach of contract of agency.
Moreover, the Court has sufficient basis to conclude that Ybaez and Lim
connived with each other to deprive Saban of his commissions by dealing
with each other directly and reducing the purchase price of the lot and
leaving nothing for Saban to compensate him for his efforts. Hence, it is
proper that Lim pays Saban the amount due to him.
(2) An agency is deemed as one coupled with interest where it is
established for the mutual benefit of the principal and of third persons, and
it cannot be revoked by the principal so long as the interest of the agent or
of third person subsists. In an agency coupled with an interest, the agents
interest must be in the subject matter of the power conferred and not
merely an interest in the exercise of the power because it entitles him to
compensation. When the agents interest is confined to earning his agreed
compensation, the agency is not coupled with an interest, since the agents
interest in obtaining his compensation as such agent is an ordinary incident
of the agency relationship.
Philex Mining Corp vs CIR
Facts: Petitioner Philex entered into an agreement with Baguio Gold Mining
Corporation for the former to manage the latters mining claim known as
the Sto. Mine. The parties agreement was denominated as Power of
Attorney. The mine suffered continuing losses over the years, which
resulted in petitioners withdrawal as manager of the mine. The parties
executed a Compromise Dation in Payment, wherein the debt of Baguio
amounted to Php. 112,136,000.00. Petitioner deducted said amount from
its gross income in its annual tax income return as loss on the settlement
of receivables from Baguio Gold against reserves and allowances. BIR
disallowed the amount as deduction for bad debt. Petitioner claims that it
entered a contract of agency evidenced by the power of attorney
executed by them and the advances made by petitioners is in the nature of
a loan and thus can be deducted from its gross income. Court of Tax
Appeals (CTA) rejected the claim and held that it is a partnership rather
than an agency. CA affirmed CTA
Issue: Whether or not it is an agency.
Held: No. The lower courts correctly held that the Power of Attorney (PA)
is the instrument material that is material in determining the true nature of
the business relationship between petitioner and Baguio. An examination of
the said PA reveals that a partnership or joint venture was indeed intended
by the parties. While a corporation like the petitioner cannot generally
enter into acontract of partnership unless authorized by law or its charter, it
has been held that it may enter into a joint venture, which is akin to a
particular partnership. The PA indicates that the parties had intended to
create a PAT and establish a common fund for the purpose. They also had a
joint interest in the profits of the business as shown by the 50-50 sharing of
income of the mine.
Moreover, in an agency coupled with interest, it is the agency that cannot
be revoked or withdrawn by the principal due to an interest of a third party
that depends upon it or the mutual interest of both principal and agent. In
this case the non-revocation or non-withdrawal under the PA applies to the
advances made by the petitioner who is the agent and not the principal
under the contract. Thus, it cannot be inferred from the stipulation that it is
an agency.
MENDOZA v. PAULE
G.R. No. 175885, 13 February 2009
Facts: Engineer Eduardo M. Paule, the proprietor of E.M. Paule Construction
and Trading (EMPCT), executed on 24 May 1999 a special power of attorney
(SPA) authorizing Zenaida G. Mendoza to participate in the bidding of a
National Irrigation Administration (NIA) and to represent him in all
transactions related thereto. The said project, which involves construction
of a road system, canal structures and drainage box culverts, was later
awarded to EMPCT through Mendoza. Mendoza entered into a lease
contract with Manuel Cruz for the heavy equipment to be used in the NIA
project. Said lease contract was entered into by Mendoza upon several
meetings with Cruz and Paule. Mendoza and Cruz signed job orders dated 2
and 22 December 1999. But on 27 April 2000, Paule revoked the SPA issued
in favor of Mendoza so NIA refused to pay Mendoza on her billings.
Consequently, Cruz could not be paid for the rent of the equipment and
filed an action for collection sum of money.
Issue: Whether or not Mendoza acted beyond her authority, granted by
Paule through an SPA, when she contracted with Cruz for the lease of heavy
equipment to be used in the implementation of the NIA project. NO
Ruling: Although the SPA limit Mendozas authority to such acts as
representing EMPCT in its business transactions with NIA, participating in
the bidding of the project, receiving and collecting payment in behalf of
EMPCT, and performing other acts in furtherance thereof, the evidence
shows that when Mendoza and Cruz met and discussed the lease of the
latters heavy equipment for use in the project, PAULE was present and
interposed no objection to Mendozas actuations. Her actions were in
accord with what she and Paule originally agreed upon, as records show, as
to division of labor and delineation of functions within their partnership.
Under the Civil Code, every partner is an agent of the partnership for the
purpose of its business; each one may separately execute all acts of