JARANTILLA, JR. vs.

JARANTILLA

636 SCRA 299, G.R. No. 154486, December 1, 2010, Leonardo-De

Castro, J.:

FACTS:

 The present case stems from the complaint filed by Antonieta Jarantilla
against the defendants Buenaventura Remotigue (asawa ng kapatid),
Cynthia Remotigue (pamangkin), Federico Jarantilla, Jr. (pamangkin),
Doroteo Jarantilla (pamangkin) and Tomas Jarantilla (pamangkin), for
the accounting of the assets and income of the co-ownership, for its
partition and the delivery of her share corresponding to eight percent
(8%), and for damages.
 Antonieta claimed that in 1946, she had entered into an agreement
with the defendants to engage in business through the execution of a
document denominated as "Acknowledgement of Participating Capital”.
 Antonieta also alleged that she had helped in the management of the
business they co-owned without receiving any salary.
 Antonieta further claimed co-ownership of certain properties (the
subject real properties) in the name of the defendants since the only
way the defendants could have purchased these properties were
through the partnership as they had no other source of income.
 The respondents did not deny the existence and validity of the
"Acknowledgement of Participating Capital" and in fact used this as
evidence to support their claim that Antonieta’s 8% share was limited
to the businesses enumerated therein.
 The respondents denied using the partnership’s income to purchase
the subject real properties.
 During the course of the trial at the RTC, petitioner Federico Jarantilla,
Jr., who was one of the original defendants, entered into a
compromise agreement17 with Antonieta Jarantilla wherein he
supported Antonieta’s claims and asserted that he too was entitled to
six percent (6%) of the supposed partnership in the same manner as
Antonieta was.
 The RTC rendered judgment in favor of Antonieta and Federico. On
appeal, the CA set the RTC Decision.

ISSUE: Did the CA err in ruling that petitioners are not entitled to
profits over the businesses not listed in the Acknowledgement?

HELD:
 There is a co-ownership when an undivided thing or right belongs to
different persons. It is a partnership when two or more persons bind
themselves to contribute money, property, or industry to a common
fund, with the intention of dividing the profits among themselves.
 The common ownership of property does not itself create a partnership
between the owners, though they may use it for the purpose of
making gains; and they may, without becoming partners, agree
among themselves as to the management, and use of such property
and the application of the proceeds therefrom.

Under Article 1767 of the Civil Code, there are two essential
elements in a contract of partnership: (a) an agreement to
contribute money, property or industry to a common fund; and
(b) intent to divide the profits among the contracting parties.

 It is not denied that all the parties in this case have agreed to
contribute capital to a common fund to be able to later on share its
profits. They have admitted this fact, agreed to its veracity, and even
submitted one common documentary evidence to prove such
partnership - the Acknowledgement of Participating Capital.

The Acknowledgement of Participating Capital is a duly

notarized document voluntarily executed by Conchita
Jarantilla-Remotigue and Buenaventura Remotigue in
1957. Petitioner does not dispute its contents and is
actually relying on it to prove his participation in the
partnership.
 The petitioner himself claims his share to be 6%, as stated in the
Acknowledgement of Participating Capital. However, petitioner fails to
realize that this document specifically enumerated the businesses
covered by the partnership: Manila Athletic Supply, Remotigue Trading
in Iloilo City and Remotigue Trading in Cotabato City.
 Since there was a clear agreement that the capital the partners
contributed went to the three businesses, then there is no reason to
deviate from such agreement and go beyond the stipulations in the
document. Therefore, the CA did not err in limiting petitioners share to
the assets of the businesses enumerated in the Acknowledgement of
Participating Capital.
 Aside from his bare allegations, he has failed to show that the
respondents used the partnerships money to purchase the said
properties. Even assuming arguendo that some partnership income
was used to acquire these properties, the petitioner should have
successfully shown that these funds came from his share in the
partnership profits. After all, by his own admission, and as stated in
 the Acknowledgement of Participating Capital, he owned a mere 6%
equity in the partnership.

Estanislao v. Court of Appeals

G.R. No. L-49982; April 27, 1988

FACTS:

 The petitioner and the private respondents were siblings who co-
owned a certain lot in QC, which were being leased to Shell.
 They agreed to open and operate a gas station to known as Estanislao
Shell Service Station with an initial investment of P15,000.00 to be
taken from the advance rentals due to them from SHELL.
 Thus, a joint affidavit was executed stating that the advanced rentals
would redound to the “capital investment” for the operation of the
partnership.
 They negotiated with SHELL and for practical purposes and in order
not to run counter to the company’s policy of appointing only one
dealer, it was agreed that petitioner would apply for the dealership.
 Consequently, the parties herein entered into an Additional Cash
Pledge Agreement with SHELL wherein it was reiterated that the
Pl5,000.00 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 that they
previously executed.
 The petitioner failed to render proper accounting of the partnership.
Thus, the private respondents filed a complaint for the petitioner to
render proper accounting, and for the respondents to be given their
proper share in the profits.
 The petitioner contended that there was no longer a partnership
existing between him and the respondents since
a. The subsequent agreement expressly superseded the former
agreement;
b. The subsequent agreement no longer referred to as “capital
investments”; and
c. The subsequent agreement was indicated that the business was in
the nature of a sole proprietorship.

ISSUE: Did the subsequent agreement terminate the existing partnership

between the petitioner and the respondents?
HELD:No.

 The Court held that the subsequent agreement did not terminate the
partnership. The Court maintained that the provision containing the
terms, “cancels and supersedes” only refers to the P15,000.00 amount
which moved the date from May 24, 1996 from May 25, 1996.
 Furthermore, while the term “capital investment” was no longer
retained in the new agreement, and that the agreement speaks of the
petitioner as the sole dealer, there still was no cancellation of the
partnership since these adjustments were only proper since shell was
a signatory and it was against their company policy that business
would be a partnership and not a sole proprietorship.
 Lastly, the Court made notice of the fact that the petitioner himself
gave periodic accounting of the business, allowed authority to the
respondent to examine and audit the accounts. Clearly, therefore, they
bound themselves to contribute money to a common fund with the
intention of dividing the profits among themselves.
G.R. No. 159333             July 31, 2006

ARSENIO T. MENDIOLA, petitioner, 
vs.
COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION,
PACIFIC FOREST RESOURCES, PHILS., INC. and/or CELLMARK
AB, respondents.

PUNO, J.:

Facts:

 Petitioner Mendiola (ATM) entered into a Side Agreement with

respndent Pacific Forest Resources (USA) who will set up a
representative office in the Philippines. They named said office as
Pacfor Phils in which petitioner is president.
 In the agreement, petitioner’s base salary and the company’s
overhead expenditures shall be borne by the representative office and
shall be funded by Pacfor/ATM being equally owned on 50-50 equity by
ATM and Pacfor-USA.
 The Side Agreement was later amended through a Revised Operating
and Profit Sharing Agreement where petitioner’s salary was increased.
However, both agreements show that the operational expenses will be
borne by the representative office and funded by all parties “as equal
partners,” while the profits and commissions will be shared among
them.
 Years later, petitioner wrote Pacfor’s VP for Asia seeking confirmation
of his 50% equity of Pacfor Phils to which Pacfor’s President replied
that petitioner is not a part-owner, his office being just a
representative office, a “theoretical company with the purpose of
dividing the income 50-50.” He even stressed that the petitioner knew
of this arrangement from beginning, having been the one to propose
to them the setting up of a representative office, instead of a branch
office, to save on taxes.

Issue: Whether or not a partnership or co-ownership exists between the

parties.

Held: NO.

 Petitioner is an employee of Pacfor and no partnership or co-ownership

exists between the parties.
 In a partnership, the members become co-owners of what is
contributed to the firm capital and of all property that may be acquired
thereby and through the efforts of the members. The property or stock
of the partnership forms a community of goods, a common fund, in
which each party has a proprietary interest. In fact, the New Civil Code
regards a partner as a co-owner of specific partnership property. Each
partner possesses a joint interest in the whole of partnership property.
If the relation does not have this feature, it is not one of partnership. 

 This essential element, the community of interest, or co-ownership of,

or joint interest in partnership property is absent in the relations
between petitioner and private respondent Pacfor.

 Petitioner is not a part-owner of Pacfor Phils. Pacfor's President

established this fact when he said that Pacfor Phils. is simply a
"theoretical company" for the purpose of dividing the income 50-50.
He stressed that petitioner knew of this arrangement from the very
start, having been the one to propose to private respondent Pacfor the
setting up of a representative office, and "not a branch office" in the
Philippines to save on taxes. Thus, the parties in this case, merely
shared profits. This alone does not make a partnership.

Besides, a corporation cannot become a member of a

partnership in the absence of express authorization by
statute or charter. This doctrine is based on the following
considerations:

(1) that the mutual agency between the partners, whereby the
corporation would be bound by the acts of persons who are not
its duly appointed and authorized agents and officers, would be
inconsistent with the policy of the law that the corporation shall
manage its own affairs separately and exclusively; and,

(2) that such an arrangement would improperly allow corporate

property to become subject to risks not contemplated by the
stockholders when they originally invested in the corporation. No
such authorization has been proved in the case at bar.
LIM TONG LIM vs. PHILIPPINE FISHING GEAR INDUSTRIES, INC.

317 SCRA 728, G.R. No. 136448, Nov. 3, 1999, Panganiban, J.:p

FACTS:

Antonio Chua and Peter Yap bought nets of various sizes and floats from
Philippine Fishing Gear (PFG) for Ocean Quest Fishing Corporation (OQF),
saying that petitioner was also involved with OQF despite not being a
signatory to the agreement.

They failed to pay the purchase price, hence PFG filed a collection case
against OQF.

PFG also alleged that OQF is a non-existent corporation by virtue of a

certification by the SEC.

RTC issued the writ of attachment on the nets, and was sold at a public
auction with the proceeds deposited to the court. RTC ruled there was
partnership between the three (Chua, Yao, Lim) anchoring on the
Compromise Agreement they executed in the civil case filed by Chua and
Yao against Lim for the declaration of ownership of the fishing boats, among
other things. CA affirmed.

ISSUE: Whether or not by their acts, Lim, Chua, and Yao are deemed to
have entered into a partnership.

HELD: Yes.

 A partnership is a contract where 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.
 The three engaged in a commercial venture for commercial fishing and
contracted loans to buy two fishing boats, and the nets and floats
needed to operate the fishing business.
 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.
It extended to the fishing nets and the floats, both essential to
fishing, which were obviously acquired in furtherance of their
business.
 Petitioner’s defense that he was a mere lessor does not hold water. In
effect, he would like this Court to believe that he consented to the sale
of his own boats to pay a debt of Chua and Yao, with the excess of the
proceeds to be divided among the three of them. No lessor would do
what petitioner did. Indeed, his consent to the sale proved that there
was a preexisting partnership among all three.
Corporation by estoppels: Although the partnership/corporation
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.
YULO V. YANG CHIAO SENG

FACTS:

 Yang Chiao Seng proposed to form a partnership with Rosario Yulo to

run and operate a theatre on the premises occupied by Cine Oro, Plaza
Sta. Cruz, Manila,
 the principal conditions of the offer being:

(1) Yang guarantees Yulo a monthly participation of P3,000

(2) partnership shall be for a period of 2 years and 6 months

with the condition that if the land is expropriated, rendered
impracticable for business,or if the owner constructs a
permanent building, or Yulo’s right to lease is terminated by the
owner then the partnership shall be terminated even if period
agreed upon has not yet expired;

(3) Yulo is authorized to personally conduct business in the lobby

of the building; and

(4) after Dec 31, 1947, all improvements placed by partnership

shall belong to Yulo but if partnership is terminated before lapse
of 1 and ½ years, Yang shall have right to remove
improvements.

 Thereafter, Parties established, “Yang and Co. Ltd.”, to exist from July
1, 1945 – Dec 31, 1947.
 In June 1946, they executed a supplementary agreement extending
the partnership for 3 years beginning Jan 1, 1948 to Dec 31, 1950 and
the benefits are to be divided between them in a rate of 50-50.
 The land on which the theater was constructed was leased by Yulo
from owners, Emilia Carrion and Maria Carrion Santa Marina for an
indefinite period but that after 1 year, such lease may be cancelled by
either party upon 90-day notice.
In Apr 1949, the owners notified Yulo of their desire to cancel
the lease contract come July. Yulo and husband brought a civil
action to declare the lease for a indefinite period. Owners
brought their own civil action for ejectment upon Yulo and Yang.

The CFI declared the contract of lease terminated.

 In 1950, Yulo demanded from Yang her share in the profits of the
business. Yang answered saying he had to suspend payment because
of pending ejectment suit.
  Yulo filed present action in 1954, alleging the existence of a
partnership between them and that Yang has refused to pay her
shares.

Defendant’s Position: The real agreement between plaintiff and defendant

was one of lease and not of partnership; that the partnership was adopted
as a subterfuge to get around the prohibition contained in the contract of
lease between the owners and the plaintiff against the sublease of the
property.

Trial Court: Dismissal. It is not true that a partnership was created between
them because defendant has not actually contributed the sum mentioned in
the Articles of Partnership or any other amount. The agreement is a lease
because plaintiff didn’t share either in the profits or in the losses of the
business as required by Art 1769 (CC) and because plaintiff was granted a
“guaranteed participation” in the profits belies the supposed existence of a
partnership.

Issue: W/N the agreement is a partnership?

Ruling: No.

The agreement was a sublease not a partnership. The following are the
requisites of partnership: (1) two or more persons who bind
themselves to contribute money, property or industry to a common
fund; (2) the intention on the part of the partners to divide the profits
among themselves (Article 1761, CC)

Plaintiff did not furnish the supposed P20,000 capital nor did she furnish any
help or intervention in the management of the theatre. Neither has she
demanded from defendant any accounting of the expenses and earnings of
the business. She was absolutely silent with respect to any of the acts that a
partner should have done; all she did was to receive her share of P3,000 a
month which cannot be interpreted in any manner than a payment for the
use of premises which she had leased from the owners.
ALFREDO N. AGUILA, JR vs. CA and FELICIDAD S. VDA. DE ABROGAR

MENDOZA, J. November 25, 1999

Aguilar Jr., is the manager of A.C. Aguila & Sons, Co., a partnership engaged
in lending activities. Felicidad Abrogar and her late husband, Ruben M.
Abrogar, were the registered owners of a house and lot, in Marikina, Metro
Manila. 

Felicidad with the consent of her late husband, and A.C. Aguila & Sons, Co.,
represented by Aguila, entered into a Memorandum of Agreement, which
provided that Felicidad has the right to repurchase the lot from Aguila within
90 days. If Felicidad fails to repurchase the lot within the said period,
Felicidad is obliged to deliver the property to Aguila within 15 days and the
MOA is deemed cancelled with the Deed of absolute sale (N.B.: buyer in the
contract is A.C.Aguila & Sons Co. not Aguilar Jr., himself) taking its place
which was executed on the same day. Felicidad also executed an SPA
authorizing Aguila to cause the cancellation of the earlier TCT and issuance
of new certificate in the name of A.C. Aguila & Sons, Co., in the event
Felicidad failed to redeem the subject property as provided in the MOA.

Felicidad failed to redeem the property within the 90-day period. Hence,
pursuant to the SPA mentioned above, Aguila Jr., caused the cancellation of
TCT No. 195101 and the issuance of a new certificate of title in the name of
A.C. Aguila and Sons, Co.

Felicidad then received a letter from the counsel for A.C. Aguila & Sons, Co.,
demanding she vacate the premises within 15 days after receipt of the letter
and surrender its possession peacefully to A.C. Aguila & Sons,
Co. Otherwise, the latter would bring the appropriate action in court, but
Felicidad refused to vacate so A.C. Aguila & Sons Co. filed an ejectment suit.

The MTC, RTC, CA, and SC- all ruled in favor of A.C. Aguila & Sons

Felicidad filed a petition for declaration of nullity of a deed of sale with the
RTC on December 4, 1993. She alleged the signature of her husband on the
deed of sale was a forgery because he was already dead when the deed was
supposed to have been executed on June 11, 1991.

The RTC dismissed the case but the CA reversed the RTC’s decision and held
that the MOA executed was a pactum commissorium.

One of Aguila Jr.’s contentions was that he is not the real party in interest
but A.C. Aguila & Co., against which this case should have been brought.
ISSUE/HELD:

WON Aguila Jr. is the real party in interest

RULING:

NO, it is A.C. Aguila & Sons. Rule 3.2 of the Rules of Court of 1964, under
which the complaint in this case was filed, provided 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

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. and the
Memorandum of Agreement was executed between Felicidad, with the
consent of her late husband, and A. C. Aguila & Sons, Co., represented by
Aguila Jr. Hence, 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.

Since Aguila Jr. is not the real party in interest against whom this action
should be prosecuted makes it unnecessary to discuss the other issues
raised by him.

DISPOSITIVE: WHEREFORE, the decision of the Court of Appeals is hereby

REVERSED and the complaint against petitioner is DISMISSED.