7.litonjua, Jr. vs. Litonjua, Sr.

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SUPREMECOURTREPORTSANNOTATEDVOLUME477
576
SUPREME COURT REPORTS ANNOTATED

Litonjua, Jr. vs. Litonjua, Sr.
*
G.R. Nos. 166299300. December 13, 2005.
AURELIO K. LITONJUA, JR., petitioner, vs. EDUARDO

K. LITONJUA, SR., ROBERT T. YANG, ANGLO PHILS.
MARITIME, INC., CINEPLEX, INC., DDM GARMENTS,
INC., EDDIE K. LITONJUA SHIPPING AGENCY, INC.,
EDDIE K. LITONJUA SHIPPING CO., INC., LITONJUA
SECURITIES, INC. (formerly E. K. Litonjua Sec),
LUNETA THEATER, INC., E & L REALTY, (formerly E &
L INTL SHIPPING CORP.), FNP CO., INC., HOME
ENTERPRISES, INC., BEAUMONT DEV. REALTY CO.,
INC., GLOED LAND CORP., EQUITY TRADING CO.,
INC., 3D CORP., L DEV. CORP, LCM THEATRICAL
ENTERPRISES, INC., LITONJUA SHIPPING CO. INC.,
MACOIL INC., ODEON REALTY CORP., SARATOGA
REALTY, INC., ACT THEATER INC. (formerly General
Theatrical & Film Exchange, INC.), AVENUE REALTY,
INC., AVENUE THEATER, INC. and LVF PHILIPPINES,
INC., (Formerly VF PHILIPPINES), respondents.
Actions Civil Law Partnership Words and Phrases A
contract of partnership is defined by the Civil Code as one where
two or more persons bound themselves to contribute money,
property, or industry to a common fund with the intention of
dividing the profits among themselves.A partnership exists
when two or more persons agree to place their money, effects,
labor, and skill in lawful commerce or business, with the
understanding that there shall be a proportionate sharing of the
profits and losses between them. A contract of partnership is
defined by the Civil Code as one where two or more persons bound
themselves to contribute money, property, or industry to a
common fund with the intention of dividing the profits among
themselves. A joint venture, on the other hand, is hardly
distinguishable from, and may be likened to, a partnership since
their elements are similar, i.e., community of interests in the
http://www.central.com.ph/sfsreader/session/000001516dac5acfc2cf2ba8003600fb002c009e/t/?o=False
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business and sharing of profits and losses. Being a form of

partnership, a joint venture is generally governed by the law on
partnership.
Same Same Same Petitioners complaint does not state a
valid cause of action because not all the essential elements of a
cause of action are present.Given the foregoing perspective,
what the appellate court wrote
_______________
*
THIRD DIVISION
577
VOL. 477, DECEMBER 13, 2005
577
in its assailed Decision about the probative value and legal effect
of Annex A1 commends itself for concurrence: Considering that
the allegations in the complaint showed that [petitioner]
contributed immovable properties to the alleged partnership, the
Memorandum (Annex A of the complaint) which purports to
establish the said partnership/joint venture is NOT a public
instrument and there was NO inventory of the immovable
property duly signed by the parties. As such, the said
Memorandum . . . is null and void for purposes of establishing
the existence of a valid contract of partnership. Indeed, because of
the failure to comply with the essential formalities of a valid
contract, the purported partnership/joint venture is legally
inexistent and it produces no effect whatsoever. Necessarily, a
void or legally inexistent contract cannot be the source of any
contractual or legal right. Accordingly, the allegations in the
complaint, including the actionable document attached thereto,
clearly demonstrates that [petitioner] has NO valid contractual or
legal right which could be violated by the [individual respondents]
herein. As a consequence, [petitioners] complaint does NOT state a
valid cause of action because NOT all the essential elements of a
cause of action are present.
Same Same Same Statute of Frauds By force of the statute
of frauds, an agreement that by its terms is not to be performed
within a year from the making thereof shall be unenforceable by
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action, unless the same, or some note or memorandum thereof, be

in writing and subscribed by the party charged.It is at once
apparent that what respondent Eduardo imposed upon himself
under the above passage, if he indeed wrote Annex A1, is a
promise which is not to be performed within one year from
contract execution on June 22, 1973. Accordingly, the agreement
embodied in Annex A1 is covered by the Statute of Frauds and
ergo unenforceable for noncompliance therewith. By force of the
statute of frauds, an agreement that by its terms is not to be
performed within a year from the making thereof shall be
unenforceable by action, unless the same, or some note or
memorandum thereof, be in writing and subscribed by the party
charged. Corollarily, no action can be proved unless the
requirement exacted by the statute of frauds is complied with.
Same Same Same Same A complaint for delivery and
accounting of partnership property based on such void or legally
nonexistent actionable document is dismissible for failure to state
a cause of action.Per the Courts own count, petitioner used in
his complaint the mixed words joint venture/partnership
nineteen (19) times and the term partner four (4) times. He
made reference to the law of joint venture/partnership [being
applicable] to the business relationship . . . between [him],
Eduardo and
578
578

Bobby [Yang] and to his rights in all specific properties of their

joint venture/partnership. Given this consideration, petitioners
right of action against respondents Eduardo and Yang doubtless
pivots on the existence of the partnership between the three of
them, as purportedly evidenced by the undated and unsigned
Annex A1. A void Annex A1, as an actionable document of
partnership, would strip petitioner of a cause of action under the
premises. A complaint for delivery and accounting of partnership
property based on such void or legally nonexistent actionable
document is dismissible for failure to state of action. So, in gist,
said the Court of Appeals. The Court agrees.
PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
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The facts are stated in the opinion of the Court.

Antonio R. Bautista & Partners for petitioner.
Emmanuel P.J. Tamase for respondent Robert T.
Yang.
Ferrer & Balayan Law Offices for private respondent
except Robert T. Yang.
GARCIA, J.:
In this petition for review under Rule 45 of the Rules of
Court, petitioner Aurelio K. Litonjua, Jr. seeks to nullify
and set aside the Decision
of the Court of Appeals (CA)
1
dated March 31, 2004 in consolidated cases C.A. G.R. Sp.
No. 76987 and C.A. G.R. SP.
No 78774 and its Resolution
2
dated December 07, 2004, denying petitioners motion for
reconsideration.
The recourse is cast against the following factual
backdrop:
Petitioner Aurelio K. Litonjua, Jr. (Aurelio) and herein
respondent Eduardo K. Litonjua, Sr. (Eduardo) are
brothers. The legal dispute between them started when, on
December 4, 2002, in the Regional Trial Court (RTC) at
Pasig City, Aurelio filed a suit
_______________
1
Penned by Associate Justice Bienvenido L. Reyes, concurred in by
Associate Justices Conrado M. Vasquez, Jr. and Arsenio J. Magpale Rollo,

pp. 27 et seq.
2
Rollo, pp. 58 et seq.

579
579
against his brother Eduardo and herein respondent Robert

T. Yang (Yang) and several corporations 3 for specific
performance and accounting. In his complaint, docketed as
Civil Case4 No. 69235 and eventually raffled to Branch 68 of
the court, Aurelio alleged that, since June 1973, he and
Eduardo are into a joint venture/partnership arrangement
in the Odeon Theater business which had expanded thru
investment in Cineplex, Inc., LCM Theatrical Enterprises,
Odeon Realty Corporation (operator of Odeon I and II
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theatres), Avenue Realty, Inc., owner of lands and

buildings, among other corporations. Yang is described in
the complaint as petitioners and
Eduardos partner in
5
their Odeon Theater investment. The same complaint also
contained the following material averments:
3.01 On or about 22 June 1973, [Aurelio] and Eduardo
entered into a joint venture/partnership for the
continuation of their family business and common
family funds . . . .
3.01.1 This joint venture/[partnership] agreement was
contained in a memorandum addressed by Eduardo
to his siblings, parents and other relatives. Copy of
this memorandum is attached hereto and made an
integral part as Annex A and the portion
referring to [Aurelio] submarked as Annex A1.
3.02 It was then agreed upon between [Aurelio] and
Eduardo that in consideration of [Aurelios]
retaining his share in the remaining family
businesses (mostly, movie theaters, shipping and
land development) and contributing his industry to
the continued operation of these businesses,
[Aurelio] will be given P1 Million or 10% equity in
all these businesses and those to be subsequently
acquired by them whichever is greater. . . .
4.01 . . . from 22 June 1973 to about August 2001, or [in]
a span of 28 years, [Aurelio] and Eduardo had
accumulated in their joint venture/partnership
various assets including but not limited to the
corporate defendants and [their] respective assets.
4.02 In addition . . . the joint venture/partnership . . .
had also acquired [various other assets], but
Eduardo caused to be registered in the names of
other parties.
_______________
3
Ibid., pp. 63 et seq.
Presided by Hon. Santiago G. Estrella.
Par. 2.03 of the Complaint.

580
580
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x x x x x x x x x
4.04 The substantial assets of most of the corporate defendants
consist of real properties . . . . A list of some of these real
properties is attached hereto and made an integral part as Annex
B.
x x x x x x x x x
5.02 Sometime in 1992, the relations between [Aurelio] and
Eduardo became sour so that [Aurelio] requested for an
accounting and liquidation of his share in the joint
venture/partnership [but these demands for complete accounting
and liquidation were not heeded].
x x x x x x x x x
5.05 What is worse, [Aurelio] has reasonable cause to believe
that Eduardo and/or the corporate defendants as well as Bobby
[Yang], are transferring . . . various real properties of the
corporations belonging to the joint venture/partnership to other
parties in fraud of [Aurelio]. In consequence, [Aurelio] is therefore
causing at this time the annotation on the titles of these real
properties. . . a notice of lis pendens . . . . (Emphasis in the
original italics and words in bracket added.)
For ease of reference, Annex A1 of the complaint, which

petitioner asserts to have been meant for him by his
brother Eduardo, pertinently reads:
10) JR. (AKL) [Referring to petitioner Aurelio K. Litonjua]:
You have now your own life to live after having been married. .
...
I am trying my best to mold you the way I work so you can
follow the pattern . . . . You will be the only one left with the
company, among us brothers and I will ask you to stay as I want
you to run this office every time I am away. I want you to run it
the way I am trying to run it because I will be all alone and I will
depend entirely to you (sic). My sons will not be ready to help me
yet until about maybe 15/20 years from now. Whatever is left in
the corporation, I will make sure that you get ONE MILLION
PESOS (P1,000,000.00) or ten percent (10%) equity, whichever is
greater. We two will gamble the whole thing of what I have and
what you are entitled to. . . . . It will be you and me alone on this.
If ever I pass away, I want you to take care of all of this. You keep
my share for my two sons are ready take over but give them the
chance to run the company which I have built.
x x x x x x x x x
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581
581

Because you will need a place to stay, I will arrange to give you
first ONE HUNDRED THOUSANDS PESOS: (P100,000.00) in
cash or asset, like Lt. Artiaga so you can live better there. The
rest I will give you in form of stocks which you can keep. This
stock I assure you is good and saleable. I will also gladly give you
the share of WackWack . . . and Valley Golf . . . because you have
been good. The rest will be in stocks from
all the corporations
6
which I repeat, ten percent (10%) equity.
On December 20, 2002, Eduardo and the corporate

respondents, as defendants a quo, filed a joint ANSWER
With Compulsory Counterclaim denying under oath the
material allegations of the complaint, more particularly
that portion thereof depicting petitioner and Eduardo as
having entered into a contract of partnership. As
affirmative defenses, Eduardo, et al., apart from raising a
jurisdictional matter, alleged that the complaint states no
cause of action, since no cause of action may be derived
from the actionable document, i.e., Annex A1, being void
under the terms of Article 1767 in relation to Article 1773
of the Civil Code, infra. It is further alleged that whatever
undertaking Eduardo agreed to do, if any, under Annex A
1, are unenforceable
under the provisions of the Statute of
7
Frauds.
For his part, Yangwho was served with summons long
after the other defendants submitted their answermoved
to dismiss on the ground, inter alia, that, as to him,
petitioner has8 no cause of action and the complaint does
not state any. Petitioner opposed this motion to dismiss.
On January 10, 2003, Eduardo,
et al., filed a Motion to
9
Resolve Affirmative Defenses. To this motion, petitioner
interposed an Opposition
with exParte Motion to Set the
10
Case for Pretrial.
Acting on the separate motions immediately adverted to
above, the trial court, in an Omnibus Order dated March 5,
2003, denied
_______________
6
Rollo, p. 552.
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7
Id., pp. 70 et seq.
Id., pp. 99 et seq.
Id., pp. 87 et seq.
10
Id., pp. 93 et seq.

582
582

the affirmative defenses and, 11except for Yang, set the case
for pretrial on April 10, 2003.
In another Omnibus Order of April 2, 2003, the same
court denied 12the motion of Eduardo, et al., for
reconsideration and Yangs motion to dismiss. The
following then transpired insofar as Yang is concerned:
1. On April 14, 2003, Yang filed his ANSWER, but
expressly reserved the right to seek reconsideration
of the April 2, 2003 Omnibus
Order and to pursue
13
his failed motion to dismiss to its full resolution.
2. On April 24, 2003, he moved for reconsideration of
the Omnibus Order of April 2, 2003, but
his motion
14
was denied in an Order of July 4, 2003.
3. On August 26, 2003, Yang went to the Court of
Appeals (CA) in a petition for certiorari under Rule
65 of the Rules
of Court, docketed as CAG.R. SP
15
No. 78774, to nullify the separate orders of the
trial court, the first denying his motion to dismiss
the basic complaint and, the second, denying his
motion for reconsideration.
Earlier, Eduardo and the corporate defendants, on the
contention that grave abuse of discretion and injudicious
haste attended the issuance of the trial courts
aforementioned Omnibus Orders dated March 5, and April
2, 2003, sought relief from the CA via similar recourse.
Their petition for certiorari was docketed as CA G.R. SP
No. 76987.
16
Per its resolution dated October 2, 2003, the CAs 14th
Division ordered the consolidation of CAG.R.SP No. 78774
with CAG.R. SP No. 76987.
Following the submission by the parties of their
respective Memoranda of Authorities, the appellate court
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came out with the

_______________
11
Id., pp. 9798.
12
Id., pp. 135 et seq.
13
See Note No. 8, supra.
14
Rollo, p. 161.
15
Ibid., pp. 206 et seq.
16
Id., p. 253.
583
583
herein assailed Decision dated March 31, 2004, finding for

Eduardo and Yang, as lead petitioners therein, disposing as
follows:
WHEREFORE, judgment is hereby rendered granting the
issuance of the writ of certiorari in these consolidated cases
annulling, reversing and setting aside the assailed orders of the
court a quo dated March 5, 2003, April 2, 2003 and July 4, 2003
and the complaint filed by private respondent [now petitioner
Aurelio] against all the petitioners [now herein respondents
Eduardo, et al.] with
the court a quo is hereby dismissed.
17
SO ORDERED. (Emphasis in the original words in bracket
added.)
Explaining its case disposition, the appellate court stated,

inter alia, that the alleged partnership, as evidenced by the
actionable documents, Annex A and A1 attached to the
complaint, and upon which petitioner solely predicates his
right/s allegedly violated by Eduardo, Yang and the
corporate defendants a quo is void or legally inexistent.
In time, petitioner moved for reconsideration but his
motion was denied by the CA
in its equally assailed
18
Resolution of December 7, 2004.
Hence, petitioners present recourse, on the contention
that the CA erred:
A. When it ruled that there was no partnership
created by the actionable document because this
was not a public instrument and immovable
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properties were contributed to the partnership.

B. When it ruled that the actionable document did not
create a demandable right in favor of petitioner.
C. When it ruled that the complaint stated no cause of
action against [respondent] Robert Yang and
_______________
17
As corrected per CA Resolution dated July 14, 2004 to conform to the
actual dates of the assailed orders Rollo, pp. 326 et seq. The correction
consisted of changing the dates March 5, 2002, April 2, 2002 and July 2,
2003 appearing in the original CA decision to March 5, 2003, April 2,
2003 and July 4, 2003, respectively.
18
See Note #2, supra.

584
584

D. When it ruled that petitioner has changed his

theory on appeal when all that Petitioner had done
was to support his pleaded cause of action by
another legal perspective/argument.
The petition lacks merit.
Petitioners demand, as defined in the petitory portion of
his complaint in the trial court, is for delivery or payment
to him, as Eduardos and Yangs partner, of his
partnership/joint venture share, after an accounting has
been duly conducted of what
he deems to be
19
partnership/joint venture property.
A partnership exists when two or more persons agree to
place their money, effects, labor, and skill in lawful
commerce or business, with the understanding that there
shall be a proportionate
sharing of the profits and losses
20
between them. A contract of partnership is defined by the
Civil Code as one where two or more persons bound
themselves to contribute money, property, or industry to a
common fund with21 the intention of dividing the profits
among themselves. A joint venture, on the other hand, is
hardly distinguishable from, and may be likened to, a
partnership since their elements are similar, i.e.,
community of interests in the business and sharing of
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profits and losses. Being a form of partnership, a joint

22
venture is generally governed by the law on partnership.
The underlying issue that necessarily comes to mind in
this proceedings is whether or not petitioner and
respondent Eduardo are partners in the theatre, shipping
and realty business, as one claims but which the other
denies. And the issue bearing on the first assigned error
relates to the question of what legal provision is applicable
under the premises, petitioner seeking, as it were, to
enforce the actionable documentAnnex A1which he
depicts in his complaint to be the contract of
partnership/joint venture
_______________
19
Complaint, p. 6 Rollo, p. 68.
20
Blacks Law Dictionary, 6th ed., p. 1120.
21
Art. 1767.
22
Heirs of Tan Eng Kee vs. Court of Appeals, 341 SCRA 740 (2000),
citing Aurbach vs. Sanitary Wares Manufacturing Corp., 180 SCRA 130
(1989).
585
585
between himself and Eduardo. Clearly, then, a look at the

legal provisions determinative of the existence, or defining
the formal requisites, of a partnership is indicated.
Foremost of these are the following provisions of the Civil
Code:
Art. 1771. A partnership may be constituted in any form, except
where immovable property or real rights are contributed thereto,
in which case a public instrument shall be necessary.
Art. 1772. Every contract of partnership having a capital of
three thousand pesos or more, in money or property, shall appear
in a public instrument, which must be recorded in the Office of
the Securities and Exchange Commission.
Failure to comply with the requirement of the preceding
paragraph shall not affect the liability of the partnership and the
members thereof to third persons.
Art. 1773. A contract of partnership is void, whenever
immovable property is contributed thereto, if an inventory of said
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property is not made, signed by the parties, and attached to the

public instrument.
Annex A1, on its face, contains typewritten entries,

personal in tone, but is unsigned and undated. As an
unsigned document, there can be no quibbling that Annex
A1 does not meet the public instrumentation
requirements exacted under Article 1771 of the Civil Code.
Moreover, being unsigned and doubtless referring to a
partnership involving more than P3,000.00 in money or
property, Annex A1 cannot be presented for notarization,
let alone registered with the Securities and Exchange
Commission (SEC), as called for under the Article 1772 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 petitioners contribution, if any, to the supposed
partnership.
The CA, addressing the foregoing query, correctly stated
that petitioners contribution consisted of immovables and
real rights. Wrote that court:
586
586

A further examination of the allegations in the complaint would

show that [petitioners] contribution to the socalled
partnership/joint venture was his supposed share in the family
business that is consisting of movie theaters, shipping and land
development under paragraph 3.02 of the complaint. In other
words, his contribution as a partner in the alleged
partnership/joint
venture consisted of immovable properties and
23
real rights. . . .
Significantly enough, petitioner matteroffactly concurred

with the appellate courts observation that, prescinding
from what he himself alleged in his basic complaint, his
contribution to the partnership consisted of his share in the
Litonjua family businesses which owned variable
immovable properties.
Petitioners assertion in his motion
24
for reconsideration of the CAs decision, that what was to
be contributed to the business [of the partnership] was
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[petitioners] industry and his share in the family [theatre

and land development] business leaves no room for
speculation as to what petitioner contributed to the
perceived partnership.
Lest it be overlooked, the contractvalidating inventory
requirement under Article 1773 of the Civil Code applies as
long real property or real rights are initially brought into
the partnership. In short, it is really of no moment which of
the partners, or, in this case, who between petitioner and
his brother Eduardo, contributed immovables. In context,
the more important consideration is that real property was
contributed, in which case an inventory of the contributed
property duly signed by the parties should be attached to
the public instrument, else there is legally no partnership
to speak of.
Petitioner, in an obvious bid to evade the application of
Article 1773, argues that the immovables in question were
not contributed, but were acquired after the formation of
the supposed partnership. Needless to stress, the Court
cannot accord cogency to this specious argument. For, as
earlier stated, petitioner himself admitted contributing his
share in the supposed shipping, movie theatres
_______________
23
At p. 6 of the Decision, Rollo, p. 42.
24
At p. 6 of the motion for reconsideration Rollo, p. 55.

587
587
and realty development family businesses which already

owned immovables even before Annex A1 was allegedly
executed.
Considering thus the value and nature of petitioners
alleged contribution to the purported partnership, the
Court, even if so disposed, cannot plausibly extend Annex
A1 the legal effects that petitioner so desires and pleads
to be given. Annex A1, in fine, cannot support the
existence of the partnership sued upon and sought to be
enforced. The legal and factual milieu of the case calls for
this disposition. A partnership may be constituted in any
form, save when immovable property or real rights are
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contributed thereto or when the partnership has a capital

of at least P3,000.00,
in which case a public instrument
25
shall be necessary. And if only to stress what has
repeatedly been articulated, an inventory to be signed by
the parties and attached to the public instrument is also
indispensable to the validity of the partnership whenever
immovable property is contributed to it.
Given the foregoing perspective,26 what the appellate
court wrote in its assailed Decision about the probative
value and legal effect of Annex A1 commends itself for
concurrence:
Considering that the allegations in the complaint showed that
[petitioner] contributed immovable properties to the alleged
partnership, the Memorandum (Annex A of the complaint)
which purports to establish the said partnership/joint venture is
NOT a public instrument and there was NO inventory of the
immovable property duly signed by the parties. As such, the said
Memorandum . . . is null and void for purposes of establishing
the existence of a valid contract of partnership. Indeed, because of
the failure to comply with the essential formalities of a valid
contract, the purported partnership/joint venture is legally
inexistent and it produces no effect whatsoever. Necessarily, a
void or legally inexistent contract cannot be the source of any
contractual or legal right. Accordingly, the allegations in the
complaint, including the actionable document attached thereto,
clearly demonstrates that [petitioner] has NO valid contractual or
legal right which could be violated by the [individual respondents]
herein.
_______________
25
Vitug, COMPENDIUM of CIVIL LAW and JURISPRUDENCE, Rev. ed.,
(1993), p. 712.
26
See Note #1, supra.
588
588

As a consequence, [petitioners] complaint does NOT state a

valid cause of action because NOT all the essential elements of a
cause of action are present. (Italics and words in bracket added.)
Likewise welltaken are the following complementary

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excerpts from the 27

CAs equally assailed Resolution of
December 7, 2004
denying petitioners motion for
reconsideration:
Further, We conclude that despite glaring defects in the
allegations in the complaint as well as the actionable document
attached thereto (Rollo, p. 191), the [trial] court did not appreciate
and apply the legal provisions which were brought to its attention
by herein [respondents] in the their pleadings. In our evaluation
of [petitioners] complaint, the latter alleged inter alia to have
contributed immovable properties to the alleged partnership but
the actionable document is not a public document and there was
no inventory of immovable properties signed by the parties. Both
the allegations in the complaint and the actionable documents
considered, it is crystal clear that [petitioner] has no valid or legal
right which could be violated by [respondents]. (Words in bracket
added.)
Under the second assigned error, it is petitioners posture

that Annex A1, assuming its inefficacy or nullity as a
partnership document, nevertheless created demandable
rights in his favor. As petitioner succinctly puts it in this
petition:
43. Contrariwise, this actionable document, especially
its abovequoted provisions, established an
actionable contract even though it may not be a
partnership. This actionable contract is what is
known as an innominate contract (Civil Code,
Article 1307).
44. It may not be a contract of loan, or a mortgage or
whatever, but surely the contract does create rights
and obligations of the parties and which rights and
obligations may be enforceable and demandable.
Just because the relationship created by the
agreement cannot be specifically labeled or
pigeonholed into a category of nominate contract
does not mean it is void or unenforceable.
Petitioner has thus thrusted the notion of an innominate
contract on this Courtand earlier on the CA after he
experienced a
_______________
27
See Note #2, supra.
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589
589
reversal of fortune thereatas an afterthought. The

appellate court, however, cannot really be faulted for not
yielding to petitioners dubious stratagem of altering his
theory of joint venture/partnership to an innominate
contract. For, at bottom, the appellate courts certiorari
jurisdiction was circumscribed by what was alleged to have
been the order/s issued by the trial court in grave abuse
of
28
discretion. As respondent Yang pointedly observed, since
the parties basic position had been welldefined, that of
petitioner being that the actionable document established a
partnership/joint venture, it is on those positions that the
appellate court exercised its certiorari jurisdiction.
Petitioners act of changing his original theory is an
impermissible practice and constitutes, as the CA aptly
declared, an admission of the untenability of such theory in
the first place.
[Petitioner] is now humming a different tune . . . . In a sudden
twist of stance, he has now contended that the actionable
instrument may be considered an innominate contract. x x x
Verily, this now changes [petitioners] theory of the case which is
not only prohibited by the Rules but also is an implied admission
that the very theory he himself . . . has adopted, filed and
prosecuted before the respondent court is erroneous.
Be that as it may . . . . . We hold that this new theory
contravenes [petitioners] theory of the actionable document being
a partnership document. If anything, it is so obvious we do have
to test the sufficiency of
the cause of action on the basis of
29
partnership law x x x. (Emphasis in the original Words in
bracket added).
But even assuming in gratia argumenti that Annex A1

partakes of a perfected innominate contract, petitioners
complaint would still be dismissible as against Eduardo
and, more so, against Yang. It cannot be overemphasized
that petitioner points to Eduardo as the author of Annex
A1. Withal, even on this consideration alone, petitioners
claim against Yang is doomed from the very start.
_______________
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28
Page 26 of Yangs Memorandum Rollo, p. 494.
29
Page 4 of the CAs assailed Resolution Rollo, p. 61.

590
590

As it were, the only portion of Annex A1 which could

perhaps be remotely regarded as vesting petitioner with a
right to demand from respondent Eduardo the observance
of a determinate conduct, reads:
x x x You will be the only one left with the company, among us
brothers and I will ask you to stay as I want you to run this office
everytime I am away. I want you to run it the way I am trying to
run it because I will be alone and I will depend entirely to you, My
sons will not be ready to help me yet until about maybe 15/20
years from now. Whatever is left in the corporation, I will make
sure that you get ONE MILLION PESOS (P1,000,000.00) or ten
percent (10%) equity, whichever is greater. (Italics added)
It is at once apparent that what respondent Eduardo

imposed upon himself under the above passage, if he
indeed wrote Annex A1, is a promise which is not to be
performed within one year from contract execution on
June 22, 1973. Accordingly, the agreement embodied in
Annex A1 is covered by the Statute of Frauds
and ergo
30
unenforceable for noncompliance therewith. By force of
the statute of frauds, an agreement that by its terms is not
to be performed within a year from the making thereof
shall be unenforceable by action, unless the same, or some
note or memorandum thereof, be in writing and subscribed
by the party charged. Corollarily, no action can be proved
unless the requirement
exacted by the statute of frauds is
31
complied with.
Lest it be overlooked, petitioner is the intended
beneficiary of the P1 Million or 10% equity of the family
businesses supposedly promised by Eduardo to give in the
near future. Any suggestion that the stated amount or the
equity component of the promise was intended to go to a
common fund would be to read something not written in
Annex A1. Thus, even this angle alone argues against
the very idea of a partnership, the creation of which
requires two or more contracting minds mutually agreeing
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to con
_______________
30
#2 (a) of Art. 1403 of the Civil Code.
31
Tolentino, CIVIL CODE OF THE PHILIPPINES, Vol. IV, 1991 ed.,
p. 617.
591
591
tribute money, property or industry to a common fund with

the intention
of dividing the profits between or among
32
themselves.
In sum then, the Court rules, as did the CA, that
petitioners complaint for specific performance anchored on
an actionable document of partnership which is legally
inexistent or void or, at best, unenforceable does not state a
cause of action as against respondent Eduardo and the
corporate defendants. And if no of action can successfully
be maintained against respondent Eduardo because no
valid partnership existed between him and petitioner, the
Court cannot see its way clear on how the same action
could plausibly prosper against Yang. Surely, Yang could
not have become a partner in, or could not have had any
form of business relationship with, an inexistent
partnership.
As may be noted, petitioner has not, in his complaint,
provide the logical nexus that would tie Yang to him as his
partner. In fact, attendant circumstances would indicate
the contrary. Consider:
1. Petitioner asserted in his complaint that his so
called joint venture/partnership with Eduardo was
for the continuation of their family business and
common family funds which were
theretofore being
33
mainly managed by Eduardo. But Yang denies
kinship with the Litonjua family and petitioner has
not disputed the disclaimer.
2. In some detail, petitioner mentioned what he had
contributed to the joint venture/partnership with
Eduardo and what his share in the businesses will
be. No allegation is made whatsoever about what
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Yang contributed, if any, let alone his proportional

share in the profits. But such allegation cannot,
however, be made because, as aptly observed by the
CA, the actionable document did not contain such
provision, let alone mention the name of Yang.
How, indeed, could a person be considered a partner
when the document purporting to establish the
partnership contract did not even mention his
name.
3. Petitioner states in par. 2.01 of the complaint that
[he] and Eduardo are business partners in the
[respondent] corporations, while Bobby is his and
Eduardos partner in their Odeon Theater
investment (par. 2.03). This means that the
partnership between petitioner and Edu
_______________
32
Heirs of Tan Eng Kee vs. Court of Appeals, supra.
33
Par. 3.01 of the Complaint Rollo, p. 64.

592
592

ardo came first Yang became their partner in their Odeon

Theater investment thereafter. Several paragraphs later,
however, petitioner would contradict himself by alleging
that his investment and that of Eduardo and Yang in the
Odeon theater business has expanded through a
reinvestment of profit income and direct investments in
several corporation including but not limited to [six]
corporate respondents This simply means that the Odeon
Theatre business came before the corporate respondents.
Significantly enough, petitioner refers to the corporate
34
respondents as progeny of the Odeon Theatre business.
Needless to stress, petitioner has not sufficiently
established in his complaint the legal vinculum whence he
sourced his right to drag Yang into the fray. The Court of
Appeals, in its assailed decision, captured and formulated
the legal situation in the following wise:
[Respondent] Yang, . . . is impleaded because, as alleged in the
complaint, he is a partner of [Eduardo] and the [petitioner] in
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the Odeon Theater Investment which expanded through

reinvestments of profits and direct investments in several
corporations, thus:
x x x x x x x x x
Clearly, [petitioners] claim against . . . Yang arose from his
alleged partnership with petitioner and the respondent.
However, there was NO allegation in the complaint which directly
alleged how the supposed contractual relation was created
between [petitioner] and . . .Yang. More importantly, however, the
foregoing ruling of this Court that the purported partnership
between [Eduardo] is void and legally inexistent directly affects
said claim against . . . Yang. Since [petitioner] is trying to
establish his claim against . . . Yang by linking him to the legally
inexistent partnership . . . such attempt had become futile
because there was NOTHING that would contractually connect
[petitioner] and . . . Yang. To establish a valid cause of action, the
complaint should have a statement of fact upon which to connect
[respondent] Yang to the alleged partnership between [petitioner]
and respondent [Eduardo], including their alleged investment in
the Odeon Theater. A statement of facts on those matters is
pivotal to the complaint as they would constitute the ultimate
facts necessary to35 establish the elements of a cause of action
against . . . Yang.
_______________
34
Petition, p. 18 Rollo, p. 20.
35
Rollo, p. 45.
593
593
Pressing its point, the CA later stated in its resolution

denying petitioners motion for reconsideration the
following:
x x x Whatever the complaint calls it, it is the actionable
document attached to the complaint that is controlling. Suffice it
to state, We have not ignored the actionable document . . . As a
matter of fact, We emphasized in our decision . . . that insofar as
[Yang] is concerned, he is not even mentioned in the said
actionable document. We are therefore puzzled how a person not
mentioned in a document purporting to establish a partnership
36
could be considered a partner. (Words in bracket
ours).
20/24
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36
could be considered a partner. (Words in bracket ours).
The last issue raised by petitioner, referring to whether or

not he changed his theory of the case, as peremptorily
determined by the CA, has been discussed at length earlier
and need not detain us long. Suffice it to say that after the
CA has ruled that the alleged partnership is inexistent,
petitioner took a different tack. Thus, from a joint
venture/partnership theory which he adopted and
consistently pursued in his complaint, petitioner embraced
the innominate contract theory. Illustrative of this shift is
petitioners statement in par. #8 of his motion for
reconsideration of the CAs decision combined with what he
said in par. # 43 of this petition, as follows:
8. Whether or not the actionable document creates a partnership,
joint venture, or whatever, is a legal matter. What is
determinative for purposes of sufficiency of the complainants
allegations, is whether the actionable document bears out an
actionable contractbe it a partnership, a joint venture or
whatever or some innominate contract . . . It may be noted that
one kind of innominate contract
is what is known as du ut facias
37
(I give that you may do).
43. Contrariwise, this actionable document, especially its
abovequoted provisions, established an actionable contract even
though it may not be a partnership. This actionable contract is
what is38 known as an innominate contract (Civil Code, Article
1307).
_______________
36
Ibid., p. 61.
37
Rollo, p. 53 Citations omitted.
38
Ibid., p. 19.
594
594

Springing surprises on the opposing party is offensive to

the sporting idea of fair play, justice and due process
hence, the proscription against a party shifting from one
theory at the trial 39court to a new and different theory in
the appellate court. On the same rationale, an issue which
21/24
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was neither averred in the

complaint cannot be raised for
40
the first time on appeal. It is not difficult, therefore, to
agree with the CA when it made short shrift of petitioners
innominate contract theory on the basis of the foregoing
basic reasons.
Petitioners protestation that his act of introducing the
concept of innominate contract was not a case of changing
theories but of supporting his pleaded cause of actionthat
of the existence of a partnershipby another legal
perspective/argument, strikes the Court as a strained
attempt to rationalize an untenable position. Paragraph 12
of his motion for reconsideration of the CAs decision
virtually relegates partnership as a fallback theory. Two
paragraphs later, in the same notion, petitioner faults the
appellate court for reading, with myopic eyes, the
actionable
document
solely
as
establishing
a
partnership/joint venture. Verily, the cited paragraphs are
a study of a party hedging on whether or not to pursue the
original cause of action or altogether abandoning the same,
thus:
12. Incidentally, assuming that the actionable document created
a partnership between [respondent] Eduardo, Sr. and [petitioner],
no immovables were contributed to this partnership. x x x
14. All told, the Decision takes off from a false premise that the
actionable document attached to the complaint does not establish
a contractual relationship between [petitioner] and Eduardo,
Sr. and Roberto T Yang simply because his document does not
create a partnership or a joint venture. This is . . . a myopic
reading of the actionable document.
Per the Courts own count, petitioner used in his complaint

the mixed words joint venture/partnership nineteen (19)
times and
_______________
39
San Agustin vs. Barrios, 68 Phil. 475 (1939) citing other cases.
40
Union Bank of the Philippines vs. Court of Appeals, 359 SCRA 480
(2001).
595
595

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the term partner four (4) times. He made reference to the

law of joint venture/partnership [being applicable] to the
business relationship . . . between [him], Eduardo and
Bobby [Yang] and to his rights in all specific properties of
their joint venture/partnership. Given this consideration,
petitioners right of action against respondents Eduardo
and Yang doubtless pivots on the existence of the
partnership between the three of them, as purportedly
evidenced by the undated and unsigned Annex A1. A
void Annex A1, as an actionable document of
partnership, would strip petitioner of a cause of action
under the premises. A complaint for delivery and
accounting of partnership property based on such void or
legally nonexistent actionable document is dismissible for
failure to state of action. So, in gist, said the Court of
Appeals. The Court agrees.
WHEREFORE, the instant petition is DENIED and the
impugned Decision and Resolution of the Court of Appeals
AFFIRMED.
Cost against the petitioner.
SO ORDERED.
Panganiban (Chairman), SandovalGutierrez,
Corona and CarpioMorales, JJ., concur.
Petition denied, impugned decision and resolution
affirmed.
Note.The Statute of Frauds applies only to executory
contracts and not to contracts which are either partially or
totally performed. (Averia vs. Averia, 436 SCRA 459 [2004])
o0o
596
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12/4/2015

SUPREME COURT REPORTS ANNOTATED

G.R. Nos. 166299300. December 13, 2005.

AURELIO K. LITONJUA, JR., petitioner, vs. EDUARDO

business and sharing of profits and losses. Being a form of

VOL. 477, DECEMBER 13, 2005

Litonjua, Jr. vs. Litonjua, Sr.

action, unless the same, or some note or memorandum thereof, be

SUPREME COURT REPORTS ANNOTATED

Bobby [Yang] and to his rights in all specific properties of their

PETITION for review on certiorari of the decision and

The facts are stated in the opinion of the Court.

Penned by Associate Justice Bienvenido L. Reyes, concurred in by

Associate Justices Conrado M. Vasquez, Jr. and Arsenio J. Magpale Rollo,

Rollo, pp. 58 et seq.

VOL. 477, DECEMBER 13, 2005

Litonjua, Jr. vs. Litonjua, Sr.

against his brother Eduardo and herein respondent Robert

theatres), Avenue Realty, Inc., owner of lands and

Ibid., pp. 63 et seq.

Presided by Hon. Santiago G. Estrella.

Par. 2.03 of the Complaint.

SUPREME COURT REPORTS ANNOTATED

Litonjua, Jr. vs. Litonjua, Sr.

For ease of reference, Annex A1 of the complaint, which

VOL. 477, DECEMBER 13, 2005

Litonjua, Jr. vs. Litonjua, Sr.

On December 20, 2002, Eduardo and the corporate

Id., pp. 70 et seq.

Id., pp. 99 et seq.

Id., pp. 87 et seq.

Id., pp. 93 et seq.

SUPREME COURT REPORTS ANNOTATED

came out with the

Id., pp. 9798.

Id., pp. 135 et seq.

See Note No. 8, supra.

Ibid., pp. 206 et seq.

VOL. 477, DECEMBER 13, 2005

Litonjua, Jr. vs. Litonjua, Sr.

herein assailed Decision dated March 31, 2004, finding for

Explaining its case disposition, the appellate court stated,

properties were contributed to the partnership.

As corrected per CA Resolution dated July 14, 2004 to conform to the

See Note #2, supra.

SUPREME COURT REPORTS ANNOTATED

D. When it ruled that petitioner has changed his

profits and losses. Being a form of partnership, a joint

Complaint, p. 6 Rollo, p. 68.

Blacks Law Dictionary, 6th ed., p. 1120.

VOL. 477, DECEMBER 13, 2005

Litonjua, Jr. vs. Litonjua, Sr.

between himself and Eduardo. Clearly, then, a look at the

property is not made, signed by the parties, and attached to the

Annex A1, on its face, contains typewritten entries,

SUPREME COURT REPORTS ANNOTATED

A further examination of the allegations in the complaint would

Significantly enough, petitioner matteroffactly concurred

[petitioners] industry and his share in the family [theatre