#1

ACT NO. 3326 AN ACT TO ESTABLISH PERIODS OF PRESCRIPTION FOR VIOLATIONS

PENALIZED BY SPECIAL ACTS AND MUNICIPAL ORDINANCES AND TO PROVIDE WHEN
PRESCRIPTION SHALL BEGIN TO RUN
Section 1. Violations penalized by special acts shall, unless otherwise provided in such acts, prescribe in
accordance with the following rules: (a) after a year for offenses punished only by a fine or by imprisonment for
not more than one month, or both; (b) after four years for those punished by imprisonment for more than one
month, but less than two years; (c) after eight years for those punished by imprisonment for two years or more,
but less than six years; and (d) after twelve years for any other offense punished by imprisonment for six years or
more, except the crime of treason, which shall prescribe after twenty years. Violations penalized by municipal
ordinances shall prescribe after two months.
Sec. 2. Prescription shall begin to run from the day of the commission of the violation of the law, and if the same
be not known at the time, from the discovery thereof and the institution of judicial proceeding for its
investigation and punishment.
The prescription shall be interrupted when proceedings are instituted against the guilty person, and shall begin to
run again if the proceedings are dismissed for reasons not constituting jeopardy.
Sec. 3. For the purposes of this Act, special acts shall be acts defining and penalizing violations of the law not
included in the Penal Code.
Sec. 4. This Act shall take effect on its approval.

#2 Moran vs CA
Business Organization Partnership, Agency, Trust Profit and Loss Sharing Speculative Damages
In February 1971, Isabelo Moran and Mariano Pecson entered into a partnership agreement where they agreed to
contribute P15k each for the purpose of printing 95k posters of the delegates to the then 1971 Constitutional
Commission. Moran shall be in charge in managing the printing of the posters. It was further agreed that Pecson
will receive a commission of P1k a month starting from April 1971 to December 1971; that the partnership is to
be liquidated on December 15, 1971.
Pecson partially fulfilled his obligation to the partnership when he issued P10k in favor of the partnership. He
gave the P10k to Moran as the managing partner. Moran however did not add anything and, instead, he only
used P4k out of the P10k in printing 2,000 posters. He only printed 2,000 posters because he felt that printing all
95k posters is a losing venture because of the delay by the COMELEC in announcing the full delegates. All the
posters were sold for a total of P10k.
Pecson sued Moran. The trial court ordered Moran to pay Pecson damages. The Court of Appeals affirmed the
decision of the trial court but modified the same as it ordered Moran to pay P47.5k for unrealized profit; P8k for
Pecsons monthly commissions; P7k as return of investment because the venture never took off; plus interest.
ISSUE: Whether or not the CA judgment is correct.
HELD: No. The award of P47.5k for unrealized profit is speculative. There is no evidence whatsoever that the
partnership between the Moran and Pecson would have been a profitable venture (because base on the
circumstances then i.e. the delay of the COMELEC in proclaiming the candidates, profit is highly unlikely). In
fact, it was a failure doomed from the start. There is therefore no basis for the award of speculative damages in
favor of Pecson. Further, there is mutual breach in this case, Pecson only gave P10k instead of P15k while
Moran gave nothing at all.
As for the P8k monthly commission, this is without basis. The agreement does not state the basis of the
commission. The payment of the commission could only have been predicated on relatively extravagant profits.
The parties could not have intended the giving of a commission inspite of loss or failure of the venture. Since the
venture was a failure, Pecson is not entitled to the P8k commission.
As for the P7k award as return for Pecsons investment, the CA erred in his ruling too. Though the venture
failed, it did took off the ground as evidenced by the 2,000 posters printed. Hence, return of investment is not
proper in this case. There are risks in any business venture and the failure of the undertaking cannot entirely be
blamed on the managing partner alone, specially if the latter exercised his best business judgment, which seems
to be true in this case.
Moran must however return the unused P6k of Pecsons contribution to the partnership plus P3k representing
Pecsons profit share in the sale of the printed posters. Computation of P3k profit share is as follows: (P10k
profit from the sale of the 2,000 posters printed) (P4k expense in printing the 2k posters) = (P6k profit); Profit
2 = P3k each.

Doctrines:

Damages; Partnership; There is no factual or legal basis for award of speculative damages for likely
partnership profits.The first question raised in this petition refers to the award of P47,500.00 as the private
respondents share in the unrealized profits of the partnership. The petitioner contends that the award is highly
speculative. The petitioner maintains that the respondent court did not take into account the great risks involved
in the business undertaking. We agree with the petitioner that the award of speculative damages has no basis in
fact and law.
Same; Same; Partner who promises to contribute to partnership becomes promissory debtor of latter.The rule
is, when a partner who has undertaken to contribute a sum of money fails to do so, he becomes a debtor of the
partnership for whatever he may have promised to contribute (Art. 1786, Civil Code) and for interests and
damages from the time he should have complied with his obligation (Art. 1788, Civil Code).

Same; Same; Essence of partnership is that partners share in profits and losses.Being a contract of
partnership, each partner must share in the profits and losses of the venture. That is the essence of a partnership.
And even with an assurance made by one of the partners that they would earn a huge amount of profits, in the
absence of fraud, the other partner cannot claim a right to recover the highly speculative profits. It is a rare
business venture guaranteed to give 100% profits. In this case, on an investment of P15,000.00, the respondent
was supposed to earn a guaranteed P1,000.00 a month for eight months and around P142,500.00 on 95,000
posters costing P2.00 each but 2,000 of which were sold at P5.00 each. The fantastic nature of expected profits is
obvious. We have to take various factors into account. The failure of the Commission on Elections to proclaim
all the 320 candidates of the Constitutional Convention on time was a major factor. The petitioner used his best
business judgment and felt that it would be a losing venture to go on with the printing of the agreed 95,000
copies of the posters. Hidden risks in any business venture have to be considered.

Same; Same; Partner entitled to recover share of profits actually realized by venture.It does not follow
however that the private respondent is not entitled to recover any amount from the petitioner. The records show
that the private respondent gave P10,000.00 to the petitioner. The latter used this amount for the printing of
2,000 posters at a cost of P2.00 per poster or a total printing cost of P4,000.00. The records further show that the
2,000 copies were sold at P5.00 each. The gross income therefore was P10,000.00. Deducting the printing costs
of P4,000.00 from the gross income of P10,000.00 and with no evidence on the cost of distribution, the net
profits amount to only P6,000.00. This net profit of P6,000.00 should be divided between the petitioner and the
private respondent. And since only P4,000.00 was used by the petitioner in printing the 2,000 copies, the
remaining P6,000.00 should therefore be returned to the private respondent.

Same; Same; Agency; Where partnership venture is a failure, a partner is not entitled to any commission
promised by co-partner where agreement does not state basis of commission.The partnership agreement
stipulated that the petitioner would give the private respondent a monthly commission of P1,000.00 from April
15, 1971 to December 15, 1971 for a total of eight (8) monthly commissions.
The agreement does not state the basis of the commission. The payment of the commission could only have been
predicated on relatively extravagant profits. The parties could not have intended the giving of a commission
inspite of loss or failure of the venture. Since the venture was a failure, the private respondent is not entitled to
the P8,000.00 commission.

#5 Kee vs CA

Business Organization Partnership, Agency, Trust Periodic Accounting Profit Sharing

Benguet Lumber has been around even before World War II but during the war, its stocks were confiscated by
the Japanese. After the war, the brothers Tan Eng Lay and Tan Eng Kee pooled their resources in order to revive
the business. In 1981, Tan Eng Lay caused the conversion of Benguet Lumber into a corporation called Benguet
Lumber and Hardware Company, with him and his family as the incorporators. In 1983, Tan Eng Kee died.
Thereafter, the heirs of Tan Eng Kee demanded for an accounting and the liquidation of the partnership.
Tan Eng Lay denied that there was a partnership between him and his brother. He said that Tan Eng Kee was
merely an employee of Benguet Lumber. He showed evidence consisting of Tan Eng Kees payroll; his SSS as
an employee and Benguet Lumber being the employee. As a result of the presentation of said evidence, the heirs
of Tan Eng Kee filed a criminal case against Tan Eng Lay for allegedly fabricating those evidence. Said criminal
case was however dismissed for lack of evidence.
ISSUE: Whether or not Tan Eng Kee is a partner.
HELD: No. There was no certificate of partnership between the brothers. The heirs were not able to show what
was the agreement between the brothers as to the sharing of profits. All they presented were circumstantial
evidence which in no way proved partnership.
It is obvious that there was no partnership whatsoever. Except for a firm name, there was no firm account, no
firm letterheads submitted as evidence, no certificate of partnership, no agreement as to profits and losses, and
no time fixed for the duration of the partnership. There was even no attempt to submit an accounting
corresponding to the period after the war until Kees death in 1984. It had no business book, no written account
nor any memorandum for that matter and no license mentioning the existence of a partnership.
In fact, Tan Eng Lay was able to show evidence that Benguet Lumber is a sole proprietorship. He registered the
same as such in 1954; that Kee was just an employee based on the latters payroll and SSS coverage, and other
records indicating Tan Eng Lay as the proprietor.
Also, the business definitely amounted to more P3,000.00 hence if there was a partnership, it should have been
made in a public instrument.
But the business was started after the war (1945) prior to the publication of the New Civil Code in 1950?
Even so, nothing prevented the parties from complying with this requirement.
Also, the Supreme Court emphasized that for 40 years, 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. Even if it can be speculated that a scenario wherein if excellent relations exist
among the partners at the start of the business and all the partners are more interested in seeing the firm grow
rather than get immediate returns, a deferment of sharing in the profits is perfectly plausible. But in the
situation in the case at bar, the deferment, if any, had gone on too long to be plausible. A person is presumed to
take ordinary care of his concerns. A demand for periodic accounting is evidence of a partnership which Kee
never did.
The Supreme Court also noted:
In determining whether a partnership exists, these rules shall apply:
(1) Except as provided by Article 1825, persons who are not partners as to each other are not partners as to third
persons;
(2) Co-ownership or co-possession does not of itself establish a partnership, whether such co-owners or co-
possessors do or do not share any profits made by the use of the property;
(3) The sharing of gross returns does not of itself establish a partnership, whether or not the persons sharing them
have a joint or common right or interest in any property which the returns are derived;
(4) The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in
the business, but no such inference shall be drawn if such profits were received in payment:
(a) As a debt by installment or otherwise;
(b) As wages of an employee or rent to a landlord;
(c) As an annuity to a widow or representative of a deceased partner;
(d) As interest on a loan, though the amount of payment vary with the profits of the business;
(e) As the consideration for the sale of a goodwill of a business or other property by installments or otherwise.

Doctrine:

Partnerships; Words and Phrases; In order to constitute a partnership, it must be established that (1) two or
more persons bound themselves to contribute money, property or industry to a common fund, and (2) they
intended to divide the profits among themselves.The primordial issue here is whether Tan Eng Kee and Tan
Eng Lay were partners in Benguet Lumber. A contract of partnership is defined by law as one where: x x x 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. Two or more persons may also form a partnership for the exercise of a
profession. Thus, in order to constitute a partnership, it must be established that (1) two or more persons bound
themselves to contribute money, property, or industry to a common fund, and (2) they intend to divide the profits
among themselves. The agreement need not be formally reduced into writing, since statute allows the oral
constitution of a partnership, save in two instances: (1) when immovable property or real rights are contributed,
and (2) when the partnership has a capital of three thousand pesos or more. In both cases, a public instrument is
required. An inventory to be signed by the parties and attached to the public instrument is also indispensable to
the validity of the partnership whenever immovable property is contributed to the partnership.

Same; Same; Joint Ventures; Partnership and Joint Venture, Distinguished.The trial court determined
that Tan Eng Kee and Tan Eng Lay had entered into a joint venture, which it said is akin to a particular
partnership. A particular partnership is distinguished from a joint adventure, to wit: (a) A joint adventure (an
American concept similar to our joint accounts ) is a sort of informal partnership, with no firm name and no legal
personality. In a joint account, the participating merchants can transact business under their own name, and can
be individually liable therefor, (b) Usually, but not necessarily a joint adventure is limited to a SINGLE
TRANSACTION, although the business of pursuing to a successful termination may continue for a number of
years; a partnership generally relates to a continuing business of various transactions of a certain kind.

Same; Same; Same; Same; A joint venture may be likened to a particular partnership; The legal concept of a
joint venture is of common law origin and has no precise legal definition, but it has been generally understood
to mean an organization formed for some temporary purpose.A joint venture presupposes generally a parity
of standing between the joint co-ventures or partners, in which each party has an equal proprietary interest in the
capital or property contributed, and where each party exercises equal rights in the conduct of the business.
Nonetheless, in Aurbach, et al. v. Sanitary Wares Manufacturing Corporation, et al., we expressed the view that a
joint venture may be likened to a particular partnership, thus: The legal concept of a joint venture is of common
law origin. It has no precise legal definition, but it has been generally understood to mean an organization
formed for some temporary purpose. (Gates v. Megargel, 266 Fed. 811 [1920]) It is hardly distinguishable from
the partnership, since their elements are similarcommunity of interest in the business, sharing of profits and
losses, and a mutual right of control. (Blackner v. McDermott, 176 F. 2d. 498 [1949]; Carboneau v. Peterson, 95
P.2d., 1043 [1939]; Buckley v. Chadwick, 45 Cal. 2d. 183, 288 P.2d. 12 289 P.2d. 242 [1955]). The main
distinction cited by most opinions in common law jurisdiction is that the partnership contemplates a general
business with some degree of continuity, while the joint venture is formed for the execution of a single
transaction, and is thus of a temporary nature. (Tufts v. Mann, 116 Cal. App. 170, 2 P.2d. 500 [1931]; Harmon v.
Martin, 395 111. 595, 71 NE 2d. 74 [1947]; Gates v. Megargel, 266 Fed. 811 [1920]). This observation is not
entirely accurate in this jurisdiction, since under the Civil Code, a partnership may be particular or universal, and
a particular partnership may have for its object a specific undertaking. (Art. 1783, Civil Code). It would seem
therefore that under Philippine law, a joint venture is a form of partnership and should thus be governed by the
law of partnerships. The Supreme Court has however recognized a distinction between these two business forms,
and has held that although a corporation cannot enter into a partnership contract, it may however engage in a
joint venture with others. (At p. 12, Tuazon v. Bolaos, 95 Phil. 906 [1954]) (Campos and Lopez-Campos
Comments, Notes and Selected Cases, Corporation Code 1981).

Same; Co-Ownership; A co-ownership or co-possession is not an indicium of the existence of a partnership.

None of petitioners witnesses could suitably account for the beginnings of Benguet Lumber Company, except
perhaps for Dionisio Peralta whose deceased wife was related to Matilde Abubo. He stated that when he met Tan
Eng Kee after the liberation, the latter asked the former to accompany him to get 80 pieces of G.I. sheets
supposedly owned by both brothers. Tan Eng Lay, however, denied knowledge of this meeting or of the
conversation between Peralta and his brother. Tan Eng Lay consistently testified that he had his business and his
brother had his, that it was only later on that his said brother, Tan Eng Kee, came to work for him. Be that as it
may, co-ownership or copossession (specifically here, of the G.I. sheets) is not an indicium of the existence of a
partnership.

Same; The essence of a partnership is that the partners share in the profits and losses; A demand for periodic
accounting is evidence of a partnership.Besides, 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. We have allowed a scenario wherein [i]f excellent relations exist among the partners at
the start of the business and all the partners are more interested in seeing the firm grow rather than get immediate
returns, a deferment of sharing in the profits is perfectly plausible. But in the situation in the case at bar, the
deferment, if any, had gone on too long to be plausible. A person is presumed to take ordinary care of his
concerns, x x x 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, Tang Eng Lay.
Same; Where circumstances taken singly may be inadequate to prove the intent to form a partnership,
nevertheless, the collective effect of these circumstances may be such as to support a finding of the existence of
the parties intent.In the instant case, we find private respondents arguments to be well-taken. Where
circumstances taken singly may be inadequate to prove the intent to form a partnership, nevertheless, the
collective effect of these circumstances may be such as to support a finding of the existence of the parties intent.
Yet, in the case at bench, 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.

#6 Litonjua Jr. vs Litonjuan Sr.

Business Organization Partnership, Agency, Trust Partnership, how formed

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 of Aurelio, 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 Aurelio demanded 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
of the Civil Code requires that if immovable property is contributed to the partnership an inventory shall be had
and attached to the contract.

Doctrines:

Actions; Civil Law; Partnership; Words and Phrases; A contract of partnership is defined by the Civil
Code as one where two or more persons bound themselves to contribute money, property, or industry to a
common fund with the intention of dividing the profits among themselves.A partnership exists when two or
more persons agree to place their money, effects, labor, and skill in lawful commerce or business, with the
understanding that there shall be a proportionate sharing of the profits and losses between them. A contract of
partnership is defined by the Civil Code as one where two or more persons bound themselves to contribute
money, property, or industry to a common fund with the intention of dividing the profits among themselves. A
joint venture, on the other hand, is hardly distinguishable from, and may be likened to, a partnership since their
elements are similar, i.e., community of interests in the business and sharing of profits and losses. Being a form
of partnership, a joint venture is generally governed by the law on partnership.

Same; Same; Same; Petitioners complaint does not state a valid cause of action because not all the essential
elements of a cause of action are present.Given the foregoing perspective, what the appellate court wrote in its
assailed Decision about the probative value and legal effect of Annex A-1 commends itself for concurrence:
Considering that the allegations in the complaint showed that [petitioner] contributed immovable properties to
the alleged partnership, the Memorandum (Annex A of the complaint) which purports to establish the said
partnership/joint venture is NOT a public instrument and there was NO inventory of the immovable property
duly signed by the parties. As such, the said Memorandum . . . is null and void for purposes of establishing the
existence of a valid contract of partnership. Indeed, because of the failure to comply with the essential
formalities of a valid contract, the purported partnership/joint venture is legally inexistent and it produces no
effect whatsoever. Necessarily, a void or legally inexistent contract cannot be the source of any contractual or
legal right. Accordingly, the allegations in the complaint, including the actionable document attached thereto,
clearly demonstrates that [petitioner] has NO valid contractual or legal right which could be violated by the
[individual respondents] herein. As a consequence, [petitioners] complaint does NOT state a valid cause of
action because NOT all the essential elements of a cause of action are present.

Same; Same; Same; Statute of Frauds; By force of the statute of frauds, an agreement that by its terms is not to
be performed within a year from the making thereof shall be unenforceable by action, unless the same, or some
note or memorandum thereof, be in writing and subscribed by the party charged.It is at once apparent that
what respondent Eduardo imposed upon himself under the above passage, if he indeed wrote Annex A-1, is a
promise which is not to be performed within one year from contract execution on June 22, 1973. Accordingly,
the agreement embodied in Annex A-1 is covered by the Statute of Frauds and ergo unenforceable for non-
compliance therewith. By force of the statute of frauds, an agreement that by its terms is not to be performed
within a year from the making thereof shall be unenforceable by action, unless the same, or some note or
memorandum thereof, be in writing and subscribed by the party charged. Corollarily, no action can be proved
unless the requirement exacted by the statute of frauds is complied with.

Same; Same; Same; Same; A complaint for delivery and accounting of partnership property based on such void
or legally non-existent actionable document is dismissible for failure to state a cause of action.Per the Courts
own count, petitioner used in his complaint the mixed words joint venture/partnership nineteen (19) times and
the term partner four (4) times. He made reference to the law of joint venture/partnership [being applicable]
to the business relationship . . . between [him], Eduardo and Bobby [Yang] and to his rights in all specific
properties of their joint venture/partnership. Given this consideration, petitioners right of action against
respondents Eduardo and Yang doubtless pivots on the existence of the partnership between the three of them, as
purportedly evidenced by the undated and unsigned Annex A-1. A void Annex A-1, as an actionable
document of partnership, would strip petitioner of a cause of action under the premises. A complaint for delivery
and accounting of partnership property based on such void or legally non-existent actionable document is
dismissible for failure to state of action. So, in gist, said the Court of Appeals. The Court agrees.