CASENO 1

Heirs of Tan Eng Kee vs Court of Appeals

G.R. NO 126881

FACTS:

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 Kee’s 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 Kee’s 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 latter’s 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.

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.

 CASE NO.2
G.R. No. 142293. February 27, 2003

VICENTE SY, TRINIDAD PAULINO, 6BS TRUCKING CORPORATION, and SBT TRUCKING
CORPORATION, petitioners, vs. HON. COURT OF APPEALS and JAIME SAHOT, respondents.

PONENTE: QUISUMBING, J.:

FACTS:

Private respondent Jaime Sahot, since 1958 started working as a truck helper for petitioners as family-owned trucking
business named Vicente Sy Trucking. In 1965, he became a truck driver of the same family business. 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.

In April 1994, Sahot was already 59 years old. He had been incurring absences as he was suffering from 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 had filed a week-long leave sometime in May 1994. He was medically examined and treated for EOR, presbyopia,
hypertensive retinopathy, HPN, UTI, Osteoarthritis and heart enlargement.

On June 30, 1994, Sahot was dismissed from work, due to his absences from work brought about by his illness. He ended
up sick, jobless and penniless.

On September 13, 1994, Sahot filed with the NLRC, a complaint for illegal dismissal.

The NLRC through Labor Arbiter Ariel Cadiente Santos, ruled that there was no illegal dismissal in Sahot’s case.

On appeal, the National Labor Relations Commission modified the judgment of the Labor Arbiter. It declared that private
respondent was an employee, not an industrial partner, since the start. Private respondent Sahot did not abandon his job but
his employment was terminated on account of his illness, ordered petitioners to pay private respondent separation pay in the
amount of P60,320.00, at the rate of P2,080.00 per year for 29 years of service.

Petition at the appellate court affirmed with modification the judgment of the NLRC. It held that private respondent was
indeed an employee of petitioners since 1958. It also increased the amount of separation pay awarded to private respondent
to P74,880, computed at the rate of P2,080 per year for 36 years of service from 1958 to 1994. :

ISSUE:

1. Whether or not an employer-employee relationship existed between petitioners and respondent Sahot

2. Whether or not respondent Sahot is an industrial partner as alleged by the petitioners

RULING:

Let us foremost resolve the first issue. A computation of the age of respondent shows that he was only twenty-three (23)
years when he started working with respondent as truck helper. The SC did not entertain that a twenty-three (23) year old
man, working as a truck helper, be considered an industrial partner. Supreme Court ruled that Sahot was only an employee,
not a partner of Sy from the time Sahot started working.

Because the Court of Appeals also found that an employer-employee relationship existed, petitioners aver that the
appellate courts decision gives an imprimatur to the illegal finding and conclusion of the NLRC.

Private respondent, for his part, denies that he was ever an industrial partner of petitioners. There was no written
agreement, no proof that he received a share in petitioners profits, nor was there anything to show he had any participation
with respect to the running of the business.

The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employees
conduct. The most important element is the employers control of the employees conduct, not only as to the result of the work
to be done, but also as to the means and methods to accomplish it.

For CA, private respondent had worked as a truck helper and driver of petitioners not for his own pleasure but under the
latter’s control. Therefore, Sahot was a mere employee of the petitioners.

For the second issue, 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, we affirm 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.

Time and again this Court has said that if doubt exists between the evidence presented by the employer and the
employee, the scales of justice must be tilted in favor of the latter.Here, we entertain no doubt. Private respondent since the
beginning was an employee of, not an industrial partner in, the trucking business.

DECISION:

WHEREFORE, the petition is DENIED and the decision of the Court of Appeals dated February 29, 2000 is AFFIRMED.
Petitioners must pay private respondent Jaime Sahot his separation pay for 36 years of service at the rate of one-half monthly
pay for every year of service, amounting to P74,880.00, with interest of six per centum (6%) per annum from finality of this
decision until fully paid. Costs against petitioners.
 CASE NO. 3
G.R. No. 134559 December 9, 1999
ANTONIA TORRES assisted by her husband, ANGELO TORRES; and EMETERIA BARING, petitioners,
vs.
COURT OF APPEALS and MANUEL TORRES, respondents.
PANGANIBAN, J.:

Courts may not extricate parties from the necessary consequences of their acts. That the terms of a contract turn out to be
financially disadvantageous to them will not relieve them of their obligations therein. The lack of an inventory of real property
will not ipso facto release the contracting partners from their respective obligations to each other arising from acts executed in
accordance with their agreement.

Facts:
1 Sisters Antonia Torres and Emeteria Baring, herein petitioners, entered into a "joint venture agreement" with Respondent
Manuel Torres for the development of a parcel of land into a subdivision. Pursuant to the contract, they executed a Deed of
Sale covering the said parcel of land in favor of respondent, who then had it registered in his name. By mortgaging the
property, respondent obtained from Equitable Bank a loan of P40,000 which, under the Joint Venture Agreement, was to be
used for the development of the subdivision. All three of them also agreed to share the proceeds from the sale of the
subdivided lots.

1 The project did not push through, and the land was subsequently foreclosed by the bank.

1 According to petitioners, the project failed because of "respondent's lack of funds or means and skills." They add that
respondent used the loan not for the development of the subdivision, but in furtherance of his own company, Universal
Umbrella Company.

1 Respondent alleged that he used the loan to implement the Agreement. With the said amount, he was able to effect the
survey and the subdivision of the lots. He also caused the construction of roads, curbs and gutters. Respondent claimed that
the subdivision project failed, however, because petitioners and their relatives had separately caused the annotations of
adverse claims on the title to the land, which eventually scared away prospective buyers. Despite his requests, petitioners
refused to cause the clearing of the claims, thereby forcing him to give up on the project.

Issue:
(1) WON the Agreement shows the existence of a partnership (2) WON the joint venture is void

HELD:
YES, NO

RATIO:
(1) Art. 1767. By the contract of partnership two or more persons bind themselves to contribute money, property, or industry
to a common fund, with the intention of dividing the profits among themselves.

Under the above-quoted Agreement, petitioners would contribute property to the partnership in the form of land which was to
be developed into a subdivision; while respondent would give, in addition to his industry, the amount needed for general
expenses and other costs. Furthermore, the income from the said project would be divided according to the stipulated
percentage. Clearly, the contract manifested the intention of the parties to form a partnership.

It should be stressed that the parties implemented the contract. Thus, petitioners transferred the title to the land to facilitate
its use in the name of the respondent. On the other hand, respondent caused the subject land to be mortgaged, the proceeds
of which were used for the survey and the subdivision of the land. As noted earlier, he developed the roads, the curbs and the
gutters of the subdivision and entered into a contract to construct low-cost housing units on the property.

Respondent's actions clearly belie petitioners' contention that he made no contribution to the partnership. Under Article 1767
of the Civil Code, a partner may contribute not only money or property, but also industry.

(2) Art. 1773. A contract of partnership is void, whenever immovable property is contributed thereto, if an inventory of said
property is not made, signed by the parties, and attached to the public instrument.

They contend that since the parties did not make, sign or attach to the public instrument an inventory of the real property
contributed, the partnership is void.
 We clarify. First, Article 1773 was intended primarily to protect third persons. Thus, the eminent Arturo M. Tolentino states that
under the aforecited provision which is a complement of Article 1771, 12 "The execution of a public instrument would be
useless if there is no inventory of the property contributed, because without its designation and description, they cannot be
subject to inscription in the Registry of Property, and their contribution cannot prejudice third persons. This will result in fraud
to those who contract with the partnership in the belief [in] the efficacy of the guaranty in which the immovables may consist.
Thus, the contract is declared void by the law when no such inventory is made." The case at bar does not involve third parties
who may be prejudiced.

Second, petitioners themselves invoke the allegedly void contract as basis for their claim that respondent should pay them 60
percent of the value of the property. 13 They cannot in one breath deny the contract and in another recognize it, depending on
what momentarily suits their purpose. Parties cannot adopt inconsistent positions in regard to a contract and courts will not
tolerate, much less approve, such practice.

CASE NO 4
AFISCO INSURANCE CORPORATION vs. COURT OF APPEALS, COURT OF TAX APPEALS and COMMISSIONER OF
INTERNAL REVENUE, respondents.
PANGANIBAN, J.:

Facts:

1 The petitioners are 41 non-life insurance corporations, organized and existing under the laws of the Philippines. Upon issuance
by them of Erection, Machinery Breakdown, Boiler Explosion and Contractors All Risk insurance policies, the petitioners on
August 1, 1965 entered into a Quota Share Reinsurance Treaty and a Surplus Reinsurance Treaty with the Munchener
Ruckversicherungs-Gesselschaft (hereafter called Munich), a non-resident foreign insurance corporation. The reinsurance
treaties required petitioners to form a pool. Accordingly, a pool composed of the petitioners was formed on the same day.

1 On April 14, 1976, the pool of machinery insurers submitted a financial statement and filed an Information Return of
Organization Exempt from Income Tax for the year ending in 1975, on the basis of which it was assessed by the Commissioner
of Internal Revenue deficiency corporate taxes in the amount of P1 ,843,273.60, and withholding taxes in the amount of
P1,768,799.39 and P89,438.68 on dividends paid to Munich and to the petitioners, respectively. These assessments were
protested by the petitioners through its auditors Sycip, Gorres, Velayo and Co.

1 On January 27, 1986, the Commissioner of Internal Revenue denied the protest and ordered the petitioners, assessed as Pool
of Machinery Insurers, to pay deficiency income tax, interest, and withholding tax.

1 The CA ruled in the main that the pool of machinery insurers was a partnership taxable as a corporation, and that the latters
collection of premiums on behalf of its members, the ceding companies, was taxable income. It added that prescription did not
bar the Bureau of Internal Revenue (BIR) from collecting the taxes due, because the taxpayer cannot be located at the address
given in the information return filed. Hence, this Petition for Review before us.

Issue:
WON a partnership relationship exist

Held: YES

RATIO:
Article 1767 of the Civil Code recognizes the creation of a contract of partnership when two or more persons bind themselves
to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves.[25]
Its requisites are: (1) mutual contribution to a common stock, and (2) a joint interest in the profits.[26] In other words, a
partnership is formed when persons contract to devote to a common purpose either money, property, or labor with the
intention of dividing the profits between themselves.[27] Meanwhile, an association implies associates who enter into a joint
enterprise x x x for the transaction of business.[28]

In the case before us, the ceding companies entered into a Pool Agreement[29] or an association[30] that would handle all the
insurance businesses covered under their quota-share reinsurance treaty[31] and surplus reinsurance treaty[32]with Munich.
The following unmistakably indicates a partnership or an association covered by Section 24 of the NIRC:

(1) The pool has a common fund, consisting of money and other valuables that are deposited in the name and credit of the
pool.[33] This common fund pays for the administration and operation expenses of the pool.[34]

(2) The pool functions through an executive board, which resembles the board of directors of a corporation, composed of one
representative for each of the ceding companies.[35]

(3) True, the pool itself is not a reinsurer and does not issue any insurance policy; however, its work is indispensable, beneficial
and economically useful to the business of the ceding companies and Munich, because without it they would not have received
their premiums. The ceding companies share in the business ceded to the pool and in the expenses according to a Rules of
Distribution annexed to the Pool Agreement.[36] Profit motive or business is, therefore, the primordial reason for the pools
formation. As aptly found by the CTA:
xxx The fact that the pool does not retain any profit or income does not obliterate an antecedent fact, that of the pool being
used in the transaction of business for profit. It is apparent, and petitioners admit, that their association or coaction was
indispensable [to] the transaction of the business. x x x If together they have conducted business, profit must have been the
object as, indeed, profit was earned. Though the profit was apportioned among the members, this is only a matter of
consequence, as it implies that profit actually resulted.[37]

CASE NO 5

ALFREDO AGUILA JR VS COURT OF APPEALS ET AL

GR NO 127347

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.

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 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.

CASE NO 6

AURELIO LITONJUA JR VS EDUARDO LITONJUA SR. ET AL

GR NO. 166299-300

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 Eduardo’s 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 saidpartnership 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 provepartnership.

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 Aurelio’s contribution, if any, to the supposedpartnership.

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.

CASE NO 7
[G.R. No. 136448. November 3, 1999.]
LIM TONG LIM, petitioner, vs. PHILIPPINE FISHING GEAR INDUSTRIES, INC., respondent.

FACTS:
Antonio Chua and Peter Yao entered into a contract in behalf of Ocean Quest Fishing Corporation for the purchase of fishing
nets from respondent Philippine Fishing Gear Industries, Inc. Chua and Yao claimed that they were engaged in business
venture with petitioner Lim Tong Lim, who, however, was not a signatory to the contract. The buyers failed to pay the fishing
nets. Respondent filed a collection against Chua, Yao and petitioner Lim in their capacities as general partners because it
turned out that Ocean Quest Fishing Corporation is a non-existent corporation. The trial court issued a Writ of Preliminary
Attachment, which the sheriff enforced by attaching the fishing nets. The trial court rendered its decision ruling that
respondent was entitled to the Writ of Attachment and that Chua, Yao and Lim, as general partners, were jointly liable to pay
respondent. Lim appealed to the Court of Appeals, but the appellate court affirmed the decision of the trial court that
petitioner Lim is a partner and may thus be held liable as such. Hence, the present petition. Petitioner claimed that since his
name did not appear on any of the contracts and since he never directly transacted with the respondent corporation, ergo, he
cannot be held liable.

ISSUE:

WON 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.

RATIO:

The Court ruled that having reaped the benefits of the contract entered into by Chua and Yao, with whom he had an existing

relationship, petitioner Lim is deemed a part of said association and is covered by the doctrine of corporation by estoppel. The

Court also ruled that under the principle of 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.

CASE NO 8
Tocao and Belo v. CA and Anay
GR No. 127405
Decision – October 4, 2000; Resolution – September 20, 2001
Ynares-Santiago, J

Facts:

Private respondent Nenita A. Anay met petitioner William T. Belo, then the vice-president for operations of Ultra Clean Water
Purifier, through her former employer in Bangkok. Belo introduced Anay to petitioner Marjorie Tocao, who conveyed her desire
to enter into a joint venture with her for the importation and local distribution of kitchen cookwares. Belo volunteered to
finance the joint venture and assigned to Anay the job of marketing the product considering her experience and established
relationship with West Bend Company, a manufacturer of kitchen wares in Wisconsin, U.S.A. Under the joint venture, Belo
acted as capitalist, Tocao as president and general manager, and Anay as head of the marketing department and later, vice-
president for sales. Anay organized the administrative staff and sales force while Tocao hired and fired employees, determined
commissions and/or salaries of the employees, and assigned them to different branches. The parties agreed that Belo’s name
should not appear in any documents relating to their transactions with West Bend Company. Instead, they agreed to use
Anay’s name in securing distributorship of cookware from that company. The parties agreed further that Anay would be
entitled to: (1) ten percent (10%) of the annual net profits of the business; (2) overriding commission of six percent (6%) of the
overall weekly production; (3) thirty percent (30%) of the sales she would make; and (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. The following day, October 10, she received a note from Lina T.
Cruz, marketing manager, that Marjorie Tocao had barred her from holding office and conducting demonstrations in both
Makati and Cubao offices. 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. No
answer came to Anay

In Belo’s defense, he said that he was not a partner but merely a guarantor of Tacao since the latter was new in the business.
Tocao’s defense was that Anay was merely an employee.

Issue:

Whether or not Anay was a partner of Belo and Tocao.

Held:

Yes, Anay was a partner of Tocao in the business. However, Belo was only considered as guarantor.

Ratio:

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. Where no immovable property or real rights are involved, what matters is that the
parties have complied with the requisites of a partnership. The fact that there appears to be no record in the Securities and
Exchange Commission of a public instrument embodying the partnership agreement pursuant to Article 1772 of the Civil
Code did not cause the nullification of the partnership. The pertinent provision of the Civil Code on the matter states:

Art. 1768. The partnership has a juridical personality separate and distinct from that of each of the partners, even in case of
failure to comply with the requirements of article 1772, first paragraph.

The best evidence of the existence of the partnership, which was not yet terminated (though in the winding up stage), were
the unsold goods and uncollected receivables, which were presented to the trial court. Since the partnership has not been
terminated, the petitioner and private complainant remained as co-partners.
 CASE NO 9
SUNGA-CHAN V. CHUA

FACTS
In 1977, Chua and Jacinto Sunga verbally agreed to form a partnership for the sale and distribution of Shellane LPGs. Their
business was very profitable but in 1989 Jacinto died. Upon Jacinto’s death, his daughter Lilibeth took over the business as well
as the business assets. Chua then demanded for an accounting but Lilibeth kept on evading him. In 1992 however, Lilibeth
gave Chua P200k. She said that the same represents a partial payment; that the rest will come after she finally made an
accounting. She never made an accounting so in 1992, Chua filed a complaint for “Winding Up of Partnership Affairs,
Accounting, Appraisal and Recovery of Shares and Damages with Writ of Preliminary Attachment” against Lilibeth.

ISSUE
1 WON partnership exists between Jacinto and Chua in the absence of a written contract
2 Whether or not Chua’s claim is barred by prescription.
3 WON non-registration of the contract of partnership at SEC made it void

RATIO
1 YES. A partnership may be constituted in any form, except where immovable property of real rights are contributed
thereto, in which case a public instrument shall necessary. Hence, based on the intention of the parties, as gathered
from the facts and ascertained from their language and conduct, a verbal contract of partnership may arise.

2 NO. The action for accounting filed by Chua three (3) years after Jacinto’s death was well within the prescribed period.
The Civil Code provides that an action to enforce an oral contract prescribes in six (6) years while the right to demand
an accounting for a partner’s interest as against the person continuing the business accrues at the date of
dissolution, in the absence of any contrary agreement. Considering that the death of a partner results in the
dissolution of the partnership, in this case, it was after Jacinto’s death that Chua as the surviving partner had the
right to an account of his interest as against Lilibeth. It bears stressing that while Jacinto’s death dissolved the
partnership, the dissolution did not immediately terminate the partnership. The Civil Code expressly provides
that upon dissolution, the partnership continues and its legal personality is retained until the complete winding up of
its business, culminating in its termination.

3 NO. True, Article 1772 of the Civil Code requires that partnerships with a capital of P3,000.00 or more must register
with the SEC, however, this registration requirement is not mandatory. Article 1768 of the Civil Code explicitly
provides that the partnership retains its juridical personality even if it fails to register. The failure to register the
contract of partnership does not invalidate the same as among the partners, so long as the contract has the essential
requisites, because the main purpose of registration is to give notice to third parties, and it can be assumed that the
members themselves knew of the contents of their contract.26 In the case at bar, non-compliance with this directory
provision of the law will not invalidate the partnership considering that the totality of the evidence proves that
respondent and Jacinto indeed forged the partnership in question.
 CASE NO 10
VILLAREAL V. RAMIREZ

FACTS
In 1984, Villareal, Carmelito Jose and Jesus Jose, formed a partnership for the purpose of operating a restaurant. Each
contributed P250,000.00. In 1984, Ramirez was added as a partner after he contributed P250,000.00. In 1987, Jesus withdrew
from the partnership and his capital share of P250k was returned to him as agreed upon by the other partners. Thereafter, the
restaurant suffered losses. Without informing Ramirez, Villareal and Carmelito shut down the restaurant. They then turned over
the restaurant equipments to Ramirez.Later, Ramirez sent a letter to Villareal and Carmelito telling them he’s no longer
interested in being a partner and that he’s demanding his shares in the partnership. Villareal and Carmelito ignored the
request of Ramirez hence the latter sued them.

In their defense, Villareal and Carmelito said that the restaurant equipments served as payment to Ramirez when
they were delivered to them; that Ramirez cannot ask for share in equity because the restaurant incurred debts (P240,658.00)
and irreversible business losses. Ramirez argued by saying that the equipments were merely placed in their house for storage
as the two partners allegedly searched for a better restaurant location; that he was not aware of any losses or any
indebtedness because he never took part in the management of the restaurant.

The trial court ruled in favor of Ramirez. The Court of Appeals affirmed the trial court and it further ordered Villareal
and Carmelito to pay Ramirez P253,114.00. The computation was done as follows: (Original Partnership Capital – Partnership
Debt = Partnership Asset) ÷ Number of partners; hence: (P1,000,000.00 – P240,658.00 = P759,342.00) ÷ 3 = P253,114.00.

ISSUE
1 WON respondents have the right to demand the return of their equity share
2 WON the CA’s computation of the amount to be refunded as to the respondents’ 1/3 share is correct

RATIO
1 NO. "The partnership has a juridical personality separate and distinct from that of each of the partners." Since the
capital was contributed to the partnership, not to petitioners, it is the partnership that must refund the equity of the
retiring partners.

2 NO. Since it is the partnership, as a separate and distinct entity, that must refund the shares of the partners, the
amount to be refunded is necessarily limited to its total resources. In other words, it can only pay out what it has in its
coffers, which consists of all its assets. However, before the partners can be paid their shares, the creditors of the
partnership must first be compensated. After all the creditors have been paid, whatever is left of the partnership
assets becomes available for the payment of the partners' shares.

Evidently, in the present case, the exact amount of refund equivalent to respondents' one-third share in the
partnership cannot be determined until 1)all the partnership assets will have been liquidated — in other words, sold
and converted to cash — and 2)all partnership creditors, if any, paid. The CA's computation of the amount to be
refunded to respondents as their share was thus erroneous.

When petitioners and respondents ventured into business together, they should have prepared for the fact that their
investment would either grow or shrink. In the present case, the investment of respondents substantially dwindled.
The original amount of P250,000 which they had invested could no longer be returned to them , because one third of
the partnership properties at the time of dissolution did not amount to that much.

It is a long established doctrine that the law does not relieve parties from the effects of unwise, foolish or
disastrous contracts they have entered into with all the required formalities and with full awareness of what they were
doing. Courts have no power to relieve them from obligations they have voluntarily assumed, simply because their
contracts turn out to be disastrous deals or unwise investments.
 CASE NO 11
Yu vs NLRC , G.R. No. 97212, June 30, 1993
Feliciano, J.

Facts:
Petitioner Benjamin Yu used to be the Assistant General Manager of the marble quarrying and export business operated by a
registered partnership named under Jade Mountain. The partnership was originally organized with Bendals as general manager
and three (3) limited partners (Chin Shian Jeng, Chen Ho-Fu and Yu Chang). Petitioner Yu, as assistant general manager,
received monthly salary. However, he actually received only half of his stipulated salary with the promise of the partners that
the balance would be paid when the firm shall have secured additional operating funds from abroad. Yu actually managed the
operations and finances of the business. The majority of the founding partners sold their interests in said partnership to Willy
Co and Emmanuel Zapanta without Yu’s knowledge. A new partnership was constituted solely by Co and Zapanta and it
continued to use the old firm name of Jade Mountain. Thus, Yu filed a complaint for illegal dismissal, recovery of unpaid wages
and damages.

Issues:
(1) WON the partnership which had hired petitioner Yu as Assistant General Manager had been extinguished and replaced by
a new partnerships composed of Willy Co and Emmanuel Zapanta; and
(2) if indeed a new partnership had come into existence, WON petitioner Yu could nonetheless assert his rights under his
employment contract as against the new partnership.

Held:
(1) Yes. The SC held that the legal effect of the changes in the membership of the partnership was the dissolution of the old
partnership which had hired petitioner in 1984 and the emergence of a new firm composed of Willy Co and Emmanuel
Zapanta in 1987.

Art. 1828. The dissolution of a partnership is the change in the relation of the partners caused by any partner ceasing to
be associated in the carrying on as distinguished from the winding up of the business. (Emphasis supplied)

Art. 1830. Dissolution is caused:

(1) without violation of the agreement between the partners; xxx xxx xxx
(b) by the express will of any partner, who must act in good faith, when no definite term or particular undertaking is
specified; xxx xxx xxx
(2) in contravention of the agreement between the partners, where the circumstances do not permit a dissolution under
any other provision of this article, by the express will of any partner at any time; xxx xxx xxx (Emphasis supplied)

(2) Yes. The occurrence of events which precipitate the legal consequence of dissolution of a partnership do not, however,
automatically result in the termination of the legal personality of the old partnership. Article 1829 of the Civil Code states that:
[o]n dissolution the partnership is not terminated, but continues until the winding up of partnership affairs is
completed.

Art. 1840. In the following cases creditors of the dissolved partnership are also creditors of the person or partnership
continuing the business:
(1) When any new partner is admitted into an existing partnership, or when any partner retires and assigns (or the
representative of the deceased partner assigns) his rights in partnership property to two or more of the partners, or to one or
more of the partners and one or more third persons, if the business is continued without liquidation of the partnership affairs;
(2) When all but one partner retire and assign (or the representative of a deceased partner assigns) their rights in partnership
property to the remaining partner, who continues the business without liquidation of partnership affairs, either alone or with
others;
(3) When any Partner retires or dies and the business of the dissolved partnership is continued as set forth in Nos. 1 and 2 of
this Article, with the consent of the retired partners or the representative of the deceased partner, but without any assignment
of his right in partnership property;
(4) When all the partners or their representatives assign their rights in partnership property to one or more third persons who
promise to pay the debts and who continue the business of the dissolved partnership;
(5) When any partner wrongfully causes a dissolution and remaining partners continue the businessunder the provisions of
article 1837, second paragraph, No. 2, either alone or with others, and without liquidation of the partnership affairs;
(6) When a partner is expelled and the remaining partners continue the business either alone or with others without
liquidation of the partnership affairs;
The liability of a third person becoming a partner in the partnership continuing the business, under this article, to the creditors
of the dissolved partnership shall be satisfied out of the partnership property only, unless there is a stipulation to the contrary.

When the business of a partnership after dissolution is continued under any conditions set forth in this article the creditors of
the retiring or deceased partner or the representative of the deceased partner, have a prior right to any claim of the retired
partner or the representative of the deceased partner against the person or partnership continuing the business on account of
the retired or deceased partner's interest in the dissolved partnership or on account of any consideration promised for such
interest or for his right in partnership property.
Nothing in this article shall be held to modify any right of creditors to set assignment on the ground of fraud . xxx xxx xxx
(Emphasis supplied)

Ruling: the petition for certiorari is GRANTED DUE COURSE.

CASE NO 12
Emnace vs. Court of Appeals
G.R. No. 126334. (November 23, 2001)
Ynarez-Santiago, J.

Prescription begins to run only upon the dissolution of the partnership when the final accounting is done.

FACTS:
Petitioner Emilio Emnace, Vicente Tabanao and Jacinto Divinagracia were partners in a business concern known as Ma. Nelma
Fishing Industry. In 1986, they decided to dissolve their partnership and executed an agreement of partition and distribution of
the partnership properties among them, consequent to Jacinto Divinagracias withdrawal from the partnership.

Throughout the existence of the partnership, and even after Vicente Tabanaos untimely demise in 1994, petitioner
failed to submit to Tabanaos heirs any statement of assets and liabilities of the partnership, and to render an accounting of the
partnerships finances. Petitioner also reneged on his promise to turn over to Tabanaos heirs the deceased’s 1/3 share in the
total assets of the partnership, amounting to P30,000,000.00, or the sum of P10,000,000.00, despite formal demand for
payment thereof.

Tabanaos heirs, respondents herein, filed against petitioner an action for accounting, payment of shares, division of
assets and damages. However, Petitioner Emnace contends that the complaint should be dismissed on the ground of
prescription, arguing that respondents’ action prescribed four (4) years after it accrued in 1986. In other words, petitioner
contends that the action was already prescribed in 1990, hence, beyond 1990, no action should be entertained.

ISSUE:
Whether or not the contention of Petitioner Emnace is correct that the action of Tabanos heirs is already barred on the ground
of prescription.

HELD:
No. The Court held that contrary to petitioner’s protestations that respondents right to inquire into the business affairs of the
partnership accrued in 1986, prescribing four (4) years thereafter, prescription had not even begun to run in the absence of a
final accounting.

Article 1842 of the Civil Code provides:

The right to an account of his interest shall accrue to any partner, or his legal representative as against the
winding up partners or the surviving partners or the person or partnership continuing the business, at the date of
dissolution, in the absence of any agreement to the contrary.

Applied in relation to Articles 1807 and 1809, which also deal with the duty to account, the above-cited provision states that
the right to demand an accounting accrues at the date of dissolution in the absence of any agreement to the contrary. When a
final accounting is made, it is only then that prescription begins to run. In the case at bar, no final accounting has been made,
and that is precisely what respondents are seeking in their action before the trial court, since petitioner has failed or refused to
render an accounting of the partnerships business and assets. Hence, the said action is not barred by prescription.
Final ruling: The petition is denied and the case is remanded to the RTC.
 CASE NO 14

PRIMELINK PROPERTIES AND DEVELOPMENT CORPORATION VS MA. CLARITA LAZATIN-MAGAT

GR NO 167379

FACTS:

In 1994, Primelink Properties and the Lazatin siblings entered into a joint venture agreement whereby the Lazatins shall

contribute a huge parcel of land and Primelink shall develop the same into a subdivision. For 4 years however, Primelink failed

to develop the said land. So in 1998, the Lazatins filed a complaint to rescind the joint venture agreement with prayer for

preliminary injunction. In said case, Primelink was declared in default or failing to file an answer and for asking multiple

motions for extension. The trial court eventually ruled in favor of the Lazatins and it ordered Primelink to return the possession

of said land to the Lazatins as well as some improvements which Primelink had so far over the property without the Lazatins

paying for said improvements. This decision was affirmed by the Court of Appeals. Primelink is now assailing the order; that

turning over improvements to the Lazatins without reimbursement is unjust; that the Lazatins did not ask the properties to be

placed under their possession but they merely asked for rescission.

ISSUE:

Whether or not the improvements made by Primelink should also be turned over under the possession of the Lazatins.

HELD:

Yes. In the first place, even though the Lazatins did specifically pray for possession the same (placing of improvements under

their possession) is incidental in the relief they prayed for. They are therefore entitled possession over the parcel of land plus

the improvements made thereon made by Primelink.

In this jurisdiction, joint ventures are governed by the laws of partnership. Under the laws of partnership, when a partnership is

dissolved, as in this case when the trial court rescinded the joint venture agreement, the innocent party has the right to wind

up the partnership affairs.

With the rescission of the JVA on account of petitioners’ fraudulent acts, all authority of any partner to act for the partnership is

terminated except so far as may be necessary to wind up the partnership affairs or to complete transactions begun but not yet

finished. On dissolution, the partnership is not terminated but continues until the winding up of partnership affairs is

completed. Winding up means the administration of the assets of the partnership for the purpose of terminating the business

and discharging the obligations of the partnership.

It must be stressed, too, that although the Lazatins acquired possession of the lands and the improvements thereon, the said

lands and improvements remained partnership property, subject to the rights and obligations of the parties, inter se, of the

creditors and of third parties and subject to the outcome of the settlement of the accounts between the parties, absent any
agreement of the parties in their JVA to the contrary (here no agreement in the JVA as to winding up). Until the partnership

accounts are determined, it cannot be ascertained how much any of the parties is entitled to, if at all.

CASE NO 15
G.R. No. 109248 July 3, 1995
GREGORIO F. ORTEGA, TOMAS O. DEL CASTILLO, JR., and BENJAMIN T. BACORRO, petitioners,
vs.
HON. COURT OF APPEALS, SECURITIES AND EXCHANGE COMMISSION and JOAQUIN L. MISA,respondents.

FACTS:

The law firm of ROSS, LAWRENCE, SELPH and CARRASCOSO was duly registered in the Mercantile Registry on 4 January 1937
and reconstituted with the Securities and Exchange Commission on 4 August 1948.On 30 June 1988, petitioner filed with this
Commission's Securities Investigation and Clearing Department (SICD) a petition for dissolution and liquidation of partnership,
docketed as SEC Case No. 3384. the SEC en banc reversed the decision of the Hearing Officer and held that the withdrawal of
Attorney Joaquin L. Misa had dissolved the partnership of "Bito, Misa & Lozada." The Commission ruled that, being a
partnership at will, the law firm could be dissolved by any partner at anytime, such as by his withdrawal therefrom, regardless
of good faith or bad faith, since no partner can be forced to continue in the partnership against his will.

The Court of Appeals, finding no reversible error on the part of respondent Commission, AFFIRMED in toto the SEC decision and
order appealed from. In fine, the appellate court held, per its decision of 26 February 1993, (a) that Atty. Misa's withdrawal
from the partnership had changed the relation of the parties and inevitably caused the dissolution of the partnership; (b) that
such withdrawal was not in bad faith; (c) that the liquidation should be to the extent of Attorney Misa's interest or participation
in the partnership which could be computed and paid in the manner stipulated in the partnership agreement; (d) that the case
should be remanded to the SEC Hearing Officer for the corresponding determination of the value of Attorney Misa's share in
the partnership assets; and (e) that the appointment of a receiver was unnecessary as no sufficient proof had been shown to
indicate that the partnership assets were in any such danger of being lost, removed or materially impaired.

ISSUES:

1. Whether or not the Court of Appeals has erred in holding that the partnership of Bito, Misa & Lozada (now Bito, Lozada,
Ortega & Castillo) is a partnership at will;

2. Whether or not the Court of Appeals has erred in holding that the withdrawal of private respondent dissolved the
partnership regardless of his good or bad faith; and

3. Whether or not the Court of Appeals has erred in holding that private respondent's demand for the dissolution of the
partnership so that he can get a physical partition of partnership was not made in bad faith;

HELD & RATIO:

1.Yes. The partnership agreement of the firm provides that ”[t]he partnership shall continue so long as mutually satisfactory
and upon the death or legal incapacity of one of the partners, shall be continued by the surviving partners.” A partnership that
does not fix its term is a partnership at will. That the law firm "Bito, Misa & Lozada," and now "Bito, Lozada, Ortega and
Castillo," is indeed such a partnership need not be unduly belabored. The partnership agreement does not provide for a
specified period or undertaking.

2.Yes. Any one of the partners may, at his sole pleasure, dictate a dissolution of thepartnership at will (e.g. by way of
withdrawal of a partner). He must, however, act in goodfaith, not that the attendance of bad faith can prevent the dissolution
of the partnership butthat it can result in a liability for damage.. The dissolution of a partnership is the change in the relation
of the parties caused by any partner ceasing to be associated in the carrying on, as might be distinguished from the winding
up of, the business. 8 Upon its dissolution, the partnership continues and its legal personality is retained until the complete
winding up of its business culminating in its termination. 9The liquidation of the assets of the partnership following its
dissolution is governed by various provisions of the Civil Code; 10 however, an agreement of the partners, like any other
contract, is binding among them and normally takes precedence to the extent applicable over the Code's general provisions.

3.YES. Attorney Misa did not act in bad faith. Public respondents viewed his withdrawal to have been spurred by "interpersonal
conflict" among the partners. It would not be right, we agree, to let any of the partners remain in the partnership under such
an atmosphere of animosity; certainly, not against their will. 12Indeed, for as long as the reason for withdrawal of a partner is
not contrary to the dictates of justice and fairness, nor for the purpose of unduly visiting harm and damage upon the
partnership, bad faith cannot be said to characterize the act. Bad faith, in the context here used, is no different from its normal
concept of a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity.

CASE NO 16
G.R. No. 110782 September 25, 1998
IRMA IDOS, petitioner,
vs.
COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents.

FACTS:

Eddie Alarilla supplied chemicals and rawhide to the accused-appellant Irma L. Idos for use in the latter's business of
manufacturing leather. In 1985, he joined the accused-appellant's business and formed with her a partnership under the style
"Tagumpay Manufacturing," with offices in Bulacan and Cebu City.However, the partnership was short lived. In January, 1986
the parties agreed to terminate their partnership. Upon liquidation of the business the partnership had as of May 1986
receivables and stocks worth P1,800,000.00. The complainant's share of the assets was P900,000.00 to pay for which the
accused-appellant issued the following postdated checks, all drawn against Metrobank Branch in Mandaue, Cebu.The
complainant was able to encash the first, second, and fourth checks, but the third check which is the subject of this case, was
dishonored on October 14, 1986 for insufficiency of funds. The complainant demanded payment from the accused-appellant
but the latter failed to pay. on December 18, 1986, through counsel, he made a formal demand for payment.Complainant then
filed his complaint in the Office of the Provincial Fiscal of Bulacan which on August 22, 1988 filed an information for violation of
BP Blg. 22 against accused-appellant.On February 15, 1992, the trial court rendered judgment finding the accused-appellant
guilty of the crime charged.

ISSUES:

1.WON the court confused and merged into one the legal concepts of dissolution, liquidation and termination of a partnership?

2. WON the respondent court erred in holding that the subject check was issued by petitioner to apply on account or for value,
that is, as part of the consideration of a "buy-out" of said complainant's interest in the partnership, and not merely as a
commitment on petitioner's part to return the investment share of complainant, along with any profit pertaining to said share,
in the partnership.

HELD & RATIO:

1.YES. The partners agreement to terminate the partnership did not automatically dissolved the partnership. They were in the
process of winding-up when the check in question was issued. The best evidence of the existence of the partnership, which
was not yet terminated were the unsold goods and uncollected receivables which were presented to the trial court. Article
1829 of the Civil Code provides that “on dissolution the partnership is not terminated but continues until the winding-up of
partnership affairs is completed. Since the partnership has not been terminated, Idos and Alarilla remained co-partners. The
check was issued by petitioner to respondent as would a partner to another and not as a payment by debtor to creditor. Thus,
absent the first element of the complained offense, the act is not punishable by the statute.

2.YES. The evidence on record would show that the subject check was to be funded from receivables to be collected and goods
to be sold by the partnership, and only when such collection and sale were realized. 15 Thus, there is sufficient basis for the
assertion that the petitioner issued the subject check (Metrobank Check No. 103115490 dated October 30, 1986, in the
amount of P135,828.87) to evidence only complainant's share or interest in the partnership, or at best, to show her
commitment that when receivables are collected and goods are sold, she would give to private complainant the net amount
due him representing his interest in the partnership. It did not involve a debt of or any account due and payable by the
petitioner.The parties had agreed to dissolve the partnership, such ageement did not automatically put an end to the
partnership, since they still had to sell the goods on hand and collect the receivables from debtors. In short, they were still in
the process of "winding up" the affairs of the partnership, when the check in question was issued.