Partnership

MARJORIE TOCAO v. WILLIAM BELO

G.R. NO. 127405, October 4, 2000
Ynares-Santiago, J:

DOCTRINE:
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.

FACTS:

Nenita met William, through her former employer in Bangkok. William introduced her to Marjorie, who
conveyed her desire to enter into a joint venture with her for the importation and local distribution of
kitchen cookwares. William volunteered to finance the joint venture and assigned to Nenita 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, William acted as capitalis,
Marjorie as president and general manager, and Nenita as the head of marketing department and vice-
president for sales. Nenita organized the administrative staff and sales force while Marjorie hired and
fired employees as well as determined their salaries and assignment of branches. It was agreed that
William’s name will not appear in any documents relating to their transaction with West Bend. They
operated under the name of Geminesse Enterprise, a sole proprietorship registered under Marjorie’s name.
Roger of West Bend invited Nenita to a distributorship meeting which was consented by Marjorie. Later
on, William signed a memo entitling him of 37% commission from personal sales up to December 31,
1987, and that Marjorie was no longer a VP of the enterprise and Nenita as barred from holding office
and conducting demonstrations. Nenita filed a complaint against William and Marjorie for sum of money
with damages.

ISSUE:

Whether or Not a partnership exists among the people involved

HELD:

Yes. 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. An oral contract of partnership is as
good as a written one. It was admitted that Nenita had the expertise to engage in the business of
distributorship of cookware and contributed such expertise to the partnership and hence, under the law,
she was the industrial or managing partner. By the set-up of their business, third persons were made to
believe that a partnership had indeed been forged among the three parties. Nenita is not a mere employee
of the business for in a partnership, each partner must share in the profits and losses of the venture, except
that the industrial partner shall not be liable for the losses.

MICHAEL GUY v. ATTY. GLENN GACOTT

G.R. NO. 206147, January 13, 2016
Mendoza, J:

DOCTRINE:
A partner must be separately and distinctly impleaded before he can be bound by a judgment.

FACTS:

Gacott purchased 2 brand new transreceivers from Quantech Systems Corporation (QSC) through its
employee Rey. Due to major defects,  Gacott personally returned the transreceivers to QSC and requested
that they be replaced. Rey received the returned transreceivers and promised to send him the replacement
units within 2 weeks from May 10, 1997. Time passed and Gacott did not receive the replacement units as
promised. QSC informed him that there were no available units and that it could not refund the purchased
price. Despite several demands, both oral and written, Gacott was never given a replacement or a
refund. Gacott filed a complaint for damages. Summons was served upon QSC and Rey. RTC found that
the 2 transreceivers where defective and that QSC and Rey failed to replace the same or return Gacott’s
money; hence, they are jointly and severally liable. The decision became final and executory and no
appeal was filed. Gacott secured a writ of execution, and during the execution stage, he learned that QSC
was not a corporation, but was in fact a general partnership registered with the SEC and Michael was
appointed as the General Manager. Gacott instructed the sheriff to proceed with the attachment of one of
the moto vehicles of Michael, who filed his Motion to Lift Attachment upon Personalty for he was not a
judgment debtor, and his vehicle could not be attached.

ISSUE:

Whether or Not Michael is solidarily liable with the partnership for damages arising from the breach of
Contract of Sale with Gacott

HELD:

No. Although a partnership is based on delectus personae or mutual agency, whereby any partner can
generally represent the partnership in its business affairs, it is non sequitur that a suit against the
partnership is necessarily a suit impleading each and every partner. It must be remembered that a
partnership is a juridical entity that has a distinct and separate personality from the persons composing it.
A decision rendered on a complaint in a civil action or proceeding does not bind or prejudice a person not
impleaded therein, for no person shall be adversely affected by the outcome of a civil action or
proceeding in which he is not a party. Here, Michael was never made a party to the case. He did not have
any participation in the entire proceeding until his vehicle was levied upon and he suddenly became
QSC's "co-defendant debtor" during the judgment execution stage.  It is a basic principle of law that
money judgments are enforceable only against the property incontrovertibly belonging to the judgment
debtor. A partner must first be impleaded before he could be prejudiced by the judgment against the
partnership. The partner’s solidary liability is not presumed, but only in exceptional circumstances
provided for under Articles 1822, 1823 and 1824 of the Civil Code.

ANICETO SALUDO v. PHILIPPINE NATIONAL BANK

G.R. NO. 193138, August 20, 2018
Jardeleza, J:

DOCTRINE:
Partnership for the practice of law, constituted in accordance with the Civil Code provisions on
partnership, acquires juridical personality by operation of law. Having a juridical personality distinct and
separate from its partners, such partnership is the real party-in-interest in a suit brought in connection with
a contract entered into in its name and by a person authorized to act on its behalf.

FACTS:

SAFA law office entered into a contract of lease with PNB, where the latter agreed to lease 632 square
meters of the second floor of the PNB Financial Center Building in Quezon City for a period of three
years and for a monthly rental fee of ₱l89,600.00. The rental fee is subject to a yearly escalation rate of
10%.  SAFA Law Office then occupied the leased premises and paid advance rental fees and security
deposits. On August 1, 2001, the Contract of Lease expired, but SAFA Law Office continued to occupy
the leased premises until February 2005, but discontinued paying its monthly rental obligations after
December 2002. PNB sent a demand letter for the unpaid rents and SAFA expressed its intention to
negotiate. Later on, SAFA vacated the leased premises and PNB sent a final demand for the payment of
rental obligations. Saludo, in his capacity as managing partner of SAFA Law Office, filed an amended
complaint for accounting and/or recomputation of unpaid rentals and damages against PNB in relation to
the Contract of Lease. PNB filed a motion to include an indispensable party as plaintiff, praying that
Saludo be ordered to amend anew his complaint to include SAFA Law Office as principal plaintiff. PNB
argued that the lessee in the Contract of Lease is not Saludo but SAFA Law Office, and that Saludo
merely signed the Contract of Lease as the managing partner of the law firm. Thus, SAFA Law Office
must be joined as a plaintiff in the complaint because it is considered an indispensable party under
Section 7, Rule 3 of the Rules of Court.

ISSUE:

Whether or Not SAFA Law Office is real party in interest in the case filed by Saludo against PNB

HELD:

Yes. It is the party interested in the accounting and/or recomputation of unpaid rentals and damages in
relation to the contract of lease. It is also the party that would be liable for payment to PNB of overdue
rentals, if that claim would be proven. Equally important, the general rule under Article 1816 of the Civil
Code is that partnership assets are primarily liable for the contracts entered into in the name of the
partnership and by a person authorized to act on its behalf. All partners, including industrial ones, are
only liable pro rata with all their property after all the partnership assets have been exhausted. In this
case, there is likewise no showing that SAPA Law Office, as a separate juridical entity, is being used for
fraudulent, unfair, or illegal purposes. Hence, its partners cannot be held primarily liable for the
obligations of the partnership. As it was SAFA Law Office that entered into a contract of lease with
respondent PNB, it should also be impleaded in any litigation concerning that contract.

PRIMELINK PROPERTIES v. MA. CLARITA LAZATIN-MAGAT, ET AL

G.R. NO. 167379, June 27, 2006
Callejo, Sr., J:
DOCTRINE:

As a general rule, the relation of the parties in joint ventures is governed by their agreement. When the
agreement is silent on any particular issue, the general principles of partnership may be resorted to.

FACTS:

Primelink, represented by Lopez as president, and the Respondents entered into a JVA for the
development of various lands into a villa (Tagaytay Garden Villas). Under the JVA, Respondents obliged
themselves to contribute 2 parcels of land as their share while Primelink undertook to contribute money,
personnel, machineries, equipment, contractor’s pool, marketing activities, managerial expertise and other
needed resources. Furthermore, they agreed that unresolved conflicts will be referred to voluntary
arbitration. Primelink failed to immediately secure a development permit from the city; hence,
Respondents demanded compliance with the obligations. Respondents later on decided to rescind the
JVA. The court ordered the rescission of the JVA and awarded the lands as well as the improvements
thereon to the Respondents.

ISSUE:

Whether or Not the Respondents are entitled to the possession of the parcels of land covered by the JVA
and the improvements thereon introduced by the Petitioners

HELD:

Yes. It is a form of partnership and is to be governed by the laws on partnership. The court was not
proscribed from placing respondents in possession of the parcels of land and the improvements on the
said parcels of land. It bears stressing that the parcels of land, as well as the improvements made thereon,
were contributed by the parties to the joint venture under the JVA, hence, formed part of the assets of the
joint venture. Respondents were entitled as well to the improvements as a consequence of finding that
Petitioners breached their agreement and defrauded Respondents. When the JVA was rescinded, the
partnership was dissolved/cancelled. 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. It must be
stressed, too, that although respondents 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 under Articles 1837 and 1838 of the New Civil
Code, and subject to the outcome of the settlement of the accounts between the parties as provided in
Article 1839 of the New Civil Code, absent any agreement of the parties in their JVA to the contrary.

JOSEFINA P. REALUBIT v. PROSENCIO D. JASO

G.R. NO. 178782, September 21, 2011
Perez, J:

DOCTRINE:

In the case of a dissolution of the partnership, the assignee is entitled to receive his assignor’s interest and
may require an account from the date only of the last account agreed to by all the partners

FACTS:

Josefina entered into a JVA with Francis, a French national, for the operation of an ice manufacturing
business. With Josefina as the industrial partner and Francis as capitalist partner. A deed of assignment
was issued by Francis in favor of Eden. Francis’ eventual departure from the country, caused Josefina a
letter apprising her of their acquisition of Francis’ share in the business and formally demanding an
accounting and inventory as well as remittance of their portion of profits. Faulting Josefina with
unjustified failure to heed their demand, Eden commenced the suit

ISSUE:

Whether or Not the court may order Josefina as partner in the JV to render an accounting to one who is
not a partner in the said JV

HELD:

Yes. The rule is settled that joint ventures are governed by the law on partnerships which are, in turn,
based on mutual agency or delectus personae.  Insofar as a partner’s conveyance of the entirety of his
interest in the partnership is concerned, Article 1813 of the Civil Code governs. The  transfer by a partner
of his partnership interest does not make the assignee of such interest a partner of the firm, nor entitle the
assignee to interfere in the management of the partnership business or to receive anything except the
assignee’s profits. The assignment does not purport to transfer an interest in the partnership, but only a
future contingent right to a portion of the ultimate residue as the assignor may become entitled to receive
by virtue of his proportionate interest in the capital. However, in case of fraud in the management of the
partnership, the assignee may avail himself of the usual remedies. In the case of a dissolution of the
partnership, the assignee is entitled to receive his assignor’s interest and may require an account from the
date only of the last account agreed to by all the partners. Although Eden did not, moreover, become a
partner as a consequence of the assignment and/or acquire the right to require an accounting of the
partnership business, the CA correctly granted her prayer for dissolution of the joint venture conformably
with the right granted to the purchaser of a partner’s interest under Article 1831 of the Civil Code.

MARSMAN DRYSDALE LAND v. PHILIPPINE GEOANALYTICS, INC.

G.R. NO. 183374, JUNE 29, 2010
Carpio Morales, J:

DOCTRINE:

In the absence of stipulation, the share of each in the profits and losses shall be in proportion to what he
may have contributed, but the industrial partner shall not be liable for the losses. As for the profits, the
industrial partner shall receive such share as may be just and equitable under the circumstances. If besides
his services he has contributed capital, he shall also receive a share in the profits in proportion to his
capital.

FACTS:

Marsman and Gotesco entered into a JVA for the construction and development of an office building on a
land owned by Marsman. Via a Technical Services Contract (TSC), the JV engaged the services of
Respondent to provide subsurface soil exploration, laboratory testing, seismic study and geotechnical
engineering for the project. PGI, was, however, able to drill only four of five boreholes needed to conduct
its subsurface soil exploration and laboratory testing, justifying its failure to drill the remaining borehole
to the failure on the part of the joint venture partners to clear the area where the drilling was to be made.
PGI was able to complete its seismic study though. PGI billed the JV, but the latter failed to pay its
obligations. PGI filed a complaint for collection of sum of money and damages against Marsman and
Gotesco.

ISSUE:

Whether or Not Marsman and Gotesco can be held liable for the unpaid claims against the JV

HELD:

Yes. The Court finds Marsman Drysdale and Gotesco jointly liable to PGI. PGI executed a technical
service contract with the joint venture and was never a party to the JVA. While the JVA clearly spelled
out, inter alia, the capital contributions of Marsman Drysdale (land) and Gotesco (cash) as well as the
funding and financing mechanism for the project, the same cannot be used to defeat the lawful claim of
PGI against the two joint venturers-partners. The TSC clearly listed the joint venturers Marsman Drysdale
and Gotesco as the beneficial owner of the project, and all billing invoices indicated the consortium
therein as the client. In the absence of stipulation, the share of each in the profits and losses shall be in
proportion to what he may have contributed, but the industrial partner shall not be liable for the losses. As
for the profits, the industrial partner shall receive such share as may be just and equitable under the
circumstances. If besides his services he has contributed capital, he shall also receive a share in the profits
in proportion to his capital. In the JVA, Marsman Drysdale and Gotesco agreed on a 50-50 ratio on the
proceeds of the project. They did not provide for the splitting of losses, however. Applying the above-
quoted provision of Article 1797 then, the same ratio applies in splitting obligation-loss of the joint
venture.