Partnership Case No.

Commissioner of Internal Revenue v. William J. Suter and CTA

G. R. No. L. 25532
February 28, 1969

FACTS
The limited partnership named "William J. Suter 'Morcoin' Co., Ltd.," was formed on September
30, 1947. The partners being William J. Suter (general partner), Julia Spirig and Gustav Carlson
(limited partners). They contributed, respectively, the amounts P20,000, P18,000, P2,000.

In 1948, Suter and Spirig got married. Carlson then sold his share of the partnership to the
aforementioned. The sale was duly recorded by the SEC on December 20, 1948

ISSUE
Whether or not the partnership was dissolved after the marriage and the subsequent sale of
interest of one of the partners

RULING
No. The partnership is not dissolved. The partnership in this particular case is not a universal
partnership but a particular one since the contributions were a fixed amount of money, P20,000
by William Suter and P18,000 by Julia Spirig-Suter and neither of them is an industrial partner. It
follows that the firm is not a partnership spouses are forbidden to enter according to Article 1677
of the Civil Code of 1889.

The subsequent marriage of the partners does not dissolve the partnership because such
marriage is not a cause for dissolution provided by the law. The contributions of Suter and Spirig
being separately owned and contributed before marriage. Such contributions remained their
separate property after the wedlock.
Partnership Case No. 8

MARJORIE TOCAO and WILLIAM T. BELO, Petitioners, v. COURT OF APPEALS and

NENITA A. ANAY, Respondents.
G.R. No. 127405.
October 4, 2000

FACTS
Nenita A. Anay a private respondent 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 Tacao, who conveyed her desire to enter into a joint venture with her
for the importation and local distribution of kitchen cookwares.

Belo acted as capitalist, Tocao as president and general manager and Anay as head of marketing
department and later become the vice president for sales in their joint venture. The parties agreed
that Belo’s name should not appear in any documents relating to their transactions with West
Bend Company and organized the administrative staff and the sales force; the cookware business
took off successfully. They operated under the name of Geminesse Enterprise, a sole
proprietorship registered in Marjorie Tocao’s name.

Furthermore, the parties agreed that Anay would be entitled to:

1. Ten percent of the annual net profits of the business

2. Overriding commission of six percent of the overall weekly production
3. Thirty percent of sales she would make
4. Two percent 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.

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 on October 9, 1987.
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.

Anay still received her five percent overriding commission up to December 1987. The following
year, 1988, she did not receive the same commission although the company netted gross sales
of 13,300,360. Anay filed Civil Case No. 88-509 on April 5, 1988, a complaint for sum of money
with damages against Marjorie D. Tocao and William Belo before the Regional Trial Court of
Makati, Branch 140. The trial court held that there was indeed an “oral partnership agreement
between the plaintiff and the defendants. The Court of Appeals affirmed the lower court’s decision.

ISSUE
Whether or not the parties formed a partnership.
RULING
Yes, the parties in this case formed a partnership. The Supreme Court held that to be considered
a juridical personality, a partnership must fulfil these requisites:

1. Two or more persons bind themselves to contribute money, property or industry to a common
fund:
2. For the intention of dividing the profit 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.

In this case, Belo acted as capitalist while Tocao as president and general manager and Anay as
head of the marketing department and later, vice president for sales. Moreover, Anay was entitled
to a percentage of the net profits of the business and therefore the parties formed a partnership.
Partnership Case No. 12

MICHAEL C. GUY, Petitioner, v. ATTY. GLENN C. GACOTT

G.R. No. 206147
January 13, 2016

FACTS
Atty. Glenn Gacott (Gacott) from Palawan purchased two brand new transreceivers from
Quantech Systems Corporation (QSC) in Manila through its employee Rey Medestomas. He
returned it after some time due to major defects. However, as time passed, he was unable to
obtain replacement units and was informed that no units were available and that he would be
unable to recover the purchase money. Gacott filed a complaint for damages. During the
execution stage, Gacott discovered that QSC was a general partnership registered with the
Securities and Exchange Commission, not a corporation. Guy was named General Manager of
QSC in the articles of partnership. Gacott directed the sheriff to proceed with the attachment of
one of Guy's motor vehicles based on the certification provided by the DOTC-LTO. Guy then filed
a Motion to Lift Attachment Upon Personalty, claiming that because he wasn't a judgment debtor,
his vehicle couldn't be attached. Guy's request was denied by the RTC, and he might be held
jointly and severally liable alongside QSC and Medestomas since he is the general partner.

ISSUES
Whether or not Guy is solidarily liable with the partnership for damages arising from the breach
of the sale contract with Gacott.

RULING
A partner must be separately and distinctly impleaded before he can be bound by a judgment.
Despite the fact that a partnership is based on delectus personae or mutual agency, a claim
against the partnership is not always a suit against each and every member unless it is
demonstrated that the legal fiction of a different juridical personality was being exploited for
fraudulent, unfair, or criminal purposes. The obligation of partners with respect to the partnership
liabilities is subsidiary and generally joint, which indicates that the partners shall only be liable
with their property after all the partnership assets have been exhausted. In the matter at hand,
there was no evidence that Guy did anything unlawful. As a result, holding Guy jointly and
severally accountable for the partnership's obligations was inappropriate. Accordingly, Guy’s
levied vehicle was released.
Partnership Case No. 16

Vicente Dira v. Pablo D. Tanega

GR No. 13232
June 17, 1970

FACTS
In March 1946, plaintiff and defendant together with Francisco Pagulayan entered into a
partnership for the purpose of engaging in the printing business in the City of Tacloban and that
the terms of the said partnership was for a period of five (5) years from the organization thereof.

The plaintiff was designated as president, and his salary as such was P150.00 a month. The
defendant who was the manager-treasurer of the partnership never paid him his salary. That at
the time the plaintiff was also the editor of the Leyte-Samar tribune and in accordance with their
Articles of Partnership established said periodicals. The plaintiff was to receive a salary, and that
this salary and he accrued amount therein was not also paid by the defendant. The defendant
was the business manager and the capital of the said partnership was P5,000.00 equally divided
among the partners.

Defendant had been in exclusive possession of all the printing equipment since 1946. Plaintiff
himself admitted that the defendant conducted himself as absolute owner of the printing
equipment. He testified that defendant changed location of the printing press which place he (Dira)
did not know. The defendant himself, he believed in good faith and acted accordingly. After the
refusal of the plaintiff to pay his indebtedness of P1,100.00 to him. From the above facts, it can
be deduced that defendant acquired ownership of the printing equipment and accessories. In
question as Article 1132 provides that the ownership of movables prescribes through
uninterrupted possession of eight years, without need of any condition.

Plaintiff stated that defendant ignored him and did not give him any participation since 1947 in the
business. Yet he did not demand an immediate accounting of the business.

ISSUES
1. Whether or not, plaintiff is entitled to claim partnership shares and salaries as president of the
firm and as editor of leyte-Samar tribune.
2. Whether or not, defendant acted as trustee when he took over the partnership affairs.

RULING
First Issue - No, the court agreed with the defendant that such claims were barred by prescription.
Since 1947, the defendant has had sole control of the partnership affairs, changing the name of
the company to Tanega printing press.

According to Article 1153 of the civil code, "accounting begins on the day the persons who should
render it cease in their functions," a need that was met in the instance of the appellee in 1947,
when he began to conduct the firms solely for himself. Again, the longest period in the Civil Code's
chapter on prescription is ten years. It is evident that appellant’s action for accounting is already
barred.
Second Issue - Appellant's reliance on the theory that, as a member of the partnership, appellee
continued to serve as a trustee after 1947 is also untenable. The agreements were set to expire
in 1951, when the Appellant took over the business for himself. The provisions of Article 1785 and
Article 1829 are clearly inapplicable here. These articles are premised on continuation of the
partnership as such which is not our case. In here, the appellee repudiated the partnership as
early as 1947 with either actual or presumed knowledge of the appellant. Prescription does not
run in favor of any co-owners when it comes to co-ownership, unless one of the co-owners is
claiming against the others. A circumstance irreconcilably inconsistent with the appellee’s conduct
of transferring the place of business, changing its name and not paying appellant any of the
salaries agreed upon in the articles of partnership.
Partnership Case No. 20

ZENAIDA G. MENDOZA, Petitioner, vs. ENGR. EDUARDO PAULE, ENGR. ALEXANDER

COLOMA and NATIONAL IRRIGATION ADMINISTRATION (NIA MUÑOZ, NUEVA ECIJA),
Respondents.
G.R. No. 175885
February 13, 2009

FACTS
Engineer Eduardo M. Paule (PAULE) is the proprietor of E.M. Paule Construction and Trading
(EMPCT). On May 24, 1999, PAULE executed a special power of attorney (SPA) authorizing
Zenaida G. Mendoza (MENDOZA) to participate in the pre-qualification and bidding of a National
Irrigation Administration (NIA) project and to represent him in all transactions related thereto, to
wit:

1. To represent E.M. PAULE CONSTRUCTION & TRADING of which I (PAULE) am the General
Manager in all my business transactions with National Irrigation Authority, Muñoz, Nueva
Ecija.
2. To participate in the bidding, to secure bid bonds and other documents pre-requisite in the
bidding of Casicnan Multi-Purpose Irrigation and Power Plant (CMIPPL 04-99), National
Irrigation Authority, Muñoz, Nueva Ecija.
3. To receive and collect payment in check in behalf of E.M. PAULE CONSTRUCTION &
TRADING.
4. To do and perform such acts and things that may be necessary and/or required to make the
herein authority effective.

On September 29, 1999, EMPCT, through MENDOZA, participated in the bidding of the NIA-
Casecnan Multi-Purpose Irrigation and Power Project (NIA-CMIPP) and was awarded Packages
A-10 and B-11 of the NIA-CMIPP Schedule A. On November 16, 1999, MENDOZA received the
Notice of Award which was signed by Engineer Alexander M. Coloma (COLOMA), then Acting
Project Manager for the NIACMIPP. Packages A-10 and B-11 involved the construction of a road
system, canal structures and drainage box culverts with a project cost of P5,613,591.69.

When Manuel de la Cruz (CRUZ) learned that MENDOZA needs heavy equipment for use in the
NIA project, he met up with MENDOZA in Bayuga, Muñoz, Nueva Ecija, in an apartment where
the latter was holding office under an EMPCT signboard. A series of meetings followed in said
EMPCT office among CRUZ, MENDOZA and PAULE.

On December 2 and 20, 1999, MENDOZA and CRUZ signed two Job Orders/Agreements for the
lease of the latter’s heavy equipment (dump trucks for hauling purposes) to EMPCT.

On April 27, 2000, PAULE revoked the SPA he previously issued in favor of MENDOZA;
consequently, NIA refused to make payment to MENDOZA on her billings. CRUZ, therefore, could
not be paid for the rent of the equipment.
In a letter dated April 5, 2000, CRUZ demanded from MENDOZA and/or EMPCT payment of the
outstanding rentals which amounted to P726,000.00 as of March 31, 2000.

ISSUE
Is there a partnership? If yes, can Engineer Eduardo M. Paule or Zenaida Mendoza separately
execute all acts of administration?

RULING
Engineer Eduardo M. Paule and Zenaida Mendoza had entered into a partnership with regard to
National Irrigation Administration. Engineer Paule's contribution in the partnership is his
contractor's license and his expertise, while Zenaida Mendoza would provide and secure the
needed funds for labor, materials and services and deal with the suppliers and sub-contractors.
For this, Engineer Paule would receive as his share 3% of the project cost while the rest of the
profits shall go to Zenaida Mendoza, Engineer Paule admitted this arrangement.

Zenaida Mendoza and Cruz met and discussed the lease of the latter's heavy equipment for use
in the project, Engineer Paule was present and interposed no objection to Mendoza's actuations,
and it shows in the evidence. Quite the contrary, Mendoza's actions were in accord with what she
and Engineer Paule originally agreed upon, as to division of labor and delineation of functions
within the partnership.

Under provision stated in Article 1801, If two or more partners have been entrusted with the
management of the partnership without specification of their respective duties, or without a
stipulation that one of them shall not act without the consent of all the others, each one may
separately execute all acts of administration, but if any of them should oppose the acts of the
others, the decision if the majority shall prevail. At any rate, Engineer Paule does not have any
valid cause for opposition, because his only role in the partnership is to provide his contractor's
license and expertise, while Zenaida Mendoza is responsible to the sourcing of funds, materials,
labor and equipment.

Engineer Paule should be made civilly liable for abandoning the partnership, leaving Mendoza to
fend for her own, and unduly revoking her authority to collect payments from NIA, payments which
were necessary for the settlement of obligation contracted for and already owing to laborers and
suppliers if materials and equipment like Cruz.
Partnership Case No. 24

JOSEFINA P. REALUBIT vs. PROSENCIO D. JASO and EDENG JASO

G.R. No. 178782
September 21, 2011

FACTS
Petitioner Josefina Realubit entered into a Joint Venture Agreement with Francis Eric Amaury
Biondo, a French national, for the operation of an ice manufacturing business. With Josefina as
the industrial partner and Biondo as the capitalist partner, the parties agreed that they would each
receive 40% of the net profit, with the remaining 20% to be used for the payment of the ice making
machine which was purchased for the business. For and in consideration of the sum
of P500,000.00, however, Biondo subsequently executed a Deed of Assignment transferring all
his rights and interests in the business in favor of respondent Eden Jaso, the wife of respondent
Prosencio Jaso. With Biondo’s eventual departure from the country, the Spouses Jaso caused
their lawyer to send Josefina a letter apprising her of their acquisition of said Frenchmans share
in the business and formally demanding an accounting and inventory thereof as well as the
remittance of their portion of its profits.

Faulting Josefina with unjustified failure to heed their demand, the Spouses Jaso commenced the
instant suit for specific performance, accounting, examination, audit and inventory of assets and
properties, dissolution of the joint venture, appointment of a receiver and damages. The said
complaint alleged that the Spouses Realubit had no gainful occupation or business prior to their
joint venture with Biondo and that aside from appropriating for themselves the income of the
business, they have fraudulently concealed the funds and assets thereof thru their relatives,
associates or dummies. The Spouses Realubit claimed that they have been engaged in the tube
ice trading business under a single proprietorship even before their dealings with Biondo.

The RTC rendered its Decision discounting the existence of sufficient evidence from which the
income, assets and the supposed dissolution of the joint venture can be adequately
reckoned. Upon the finding, however, that the Spouses Jaso had been nevertheless subrogated
to Biondos rights in the business in view of their valid acquisition of the latter’s share as capitalist
partner. On appeal before the CA, the foregoing decision was set aside upon the following findings
that the Spouses Jaso validly acquired Biondos share in the business which had been transferred
to and continued its operations and not dissolved as claimed by the Spouses Realubit.

ISSUES
1. Whether or not there was a valid assignment or rights to the joint venture
2. Whether or not the joint venture is a contract of partnership
3. Whether or not Jaso acquired the title of being a partner based on the Deed of Assignment

RULING
1. Yes. As a public document, the Deed of Assignment Biondo executed in favor of Eden not
only enjoys a presumption of regularity but is also considered prima facie evidence of the facts
 therein stated. A party assailing the authenticity and due execution of a notarized document
is, consequently, required to present evidence that is clear, convincing and more than merely
preponderant. In view of the Spouses Realubits failure to discharge this onus, we find that
both the RTC and the CA correctly upheld the authenticity and validity of said Deed of
Assignment upon the combined strength of the above-discussed disputable presumptions and
the testimonies elicited from Eden and Notary Public Rolando Diaz.

2. Yes. Generally understood to mean an organization formed for some temporary purpose, a
joint venture is likened to a particular partnership or one which has for its object determinate
things, their use or fruits, or a specific undertaking, or the exercise of a profession or vocation.
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.

3. No. It is evident that 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 assignees
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. Since a partner’s interest in the
partnership includes his share in the profits, we find that the CA committed no reversible error
in ruling that the Spouses Jaso are entitled to Biondos share in the profits, despite Juanitas
lack of consent to the assignment of said Frenchmans interest in the joint
venture. 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.
Partnership Case No. 28

IRMA IDOS, petitioner, vs. COURT OF APPEALS and PEOPLE OF THE PHILIPPINES,
respondents
GR No. 110782
September 25, 1998

FACTS
Irma L. Idos was engaged in leather tanning business. In 1985, Eddie Alarilla, the complainant,
joined and formed a partnership business with Idos. Shortly, the partners agreed to dissolve the
partnership after a year. Upon the liquidation process, the partnership had P1,800,000 of stocks
and receivables. Alarilla’s share of the assets is P900,000, wherein Idos issued four (4) postdated
checks.

Alarilla was able to encash three checks, but the third check bounced due to insufficiency of funds.
The complainant made a formal demand of payment, yet the accused-appellant denied liability.
Following the failure of compliance, Alarilla filed an information for violation of BP Blg.22 against
Idos. In the latter’s defense, the checks serve as an “assurance” of the former’s share in the
assets and it was not supposed to be deposited until the stocks had been sold.

RTC found Idos guilty of the crime charged and was denied for reconsideration. Court of Appeals
affirmed the decision of the court, hence, this petition for certiorari.

ISSUES
1. Whether or not the respondent court erred in affirming the trial court’s judgement that Idos
violated Batas Pambansa Blg.22.
2. Whether or not the respondent court has confused and merged into one the legal concepts of
dissolution, liquidation, and termination of a partnership.

RULING
1. Yes. 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. There is
sufficient basis that the petitioner issued the subject check to serve as an evidence the
complainant’s share or interest in the partnership or to show that Idos’ commitment to give
Alarilla the net amount due to him representing his interest in the partnership after the
receivables are collected and goods are sold. The petitioner exerted her best efforts to sell
the remaining goods and to collect the receivables of the partnership, in order to come up with
the amount necessary to satisfy the value of complainant's interest in the partnership at the
dissolution thereof.

Absent the first element of the offense penalized under B.P. 22, which is "the making, drawing
and issuance of any check to apply on account or for value", petitioner's issuance of the
subject check was not an act contemplated in nor made punishable by the said statute; but
rather, it should be deemed as having been drawn without consideration at the time of issue.
2. Yes. The partner’s agreement to dissolve the partnership does not automatically terminate
the said partnership. They are still under the process of “winding up” the affairs of the
partnership, when the check in question was issued. 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.

According to Article 1829, 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, the petitioner and private complainant remained as co-partners. The check was
thus issued by the petitioner to complainant, as would a partner to another, and not as
payment from a debtor to a creditor.

Hence, the SC granted the instant petition and the petitioner is acquitted. The CA’s decision
is reversed and the RTC’s decision is set aside.
Partnership Case No. 32

LUZVIMINDA J. VILLAREAL, DIOGENES VILLAREAL and CARMELITO JOSE, Petitioners,

v. DONALDO EFREN C. RAMIREZ and Spouses CESAR G. RAMIREZ JR. and CARMELITA
C. RAMIREZ, Respondents.
G.R. No. 144214
July 14, 2003

FACTS
On July 25, 1984, Luzviminda J. Villareal, Carmelito Jose and Jesus Jose formed a partnership
with a capital of P750,000 for the operation of a restaurant and catering business under the name
"Aquarius Food House and Catering Services." 5 Villareal was appointed general manager and
Carmelito Jose, operations manager.

Donaldo Efren C. Ramirez joined as a partner in the business on September 5, 1984. His capital
contribution of P250,000 was paid by his parents. After Jesus Jose withdrew from the partnership
in January 1987, his capital contribution of P250,000 was refunded to him in cash by agreement
of the partners. Petitioners closed down the restaurant, without prior knowledge of respondents.
The restaurant furniture and equipment were deposited in the respondents’ house for storage.

On March 1, 1987, respondent spouses wrote petitioners, saying that they were no longer
interested in continuing their partnership or in reopening the restaurant, and that they were
accepting the latter’s offer to return their capital contribution.
October 13, 1987, Carmelita Ramirez wrote another letter informing petitioners of the deterioration
of the restaurant furniture and equipment stored in their house. Also reiterated the request for the
return of their one-third share in the equity of the partnership. The repeated oral and written
requests were, however, left unheeded.

Petitioners contended that respondents had expressed a desire to withdraw from the partnership
and had called for its dissolution under Articles 1830 and 1831 of the Civil Code; that respondents
had been paid, upon the turnover to them of furniture and equipment worth over P400,000. The
respondents further averred that they had not received any regular report or accounting from the
petitioners, who had solely managed the business. Respondents also alleged that they expected
the equipment and the furniture stored in their house to be removed by petitioners as soon as the
latter found a better location for the restaurant.
Respondents filed an Urgent Motion for Leave to Sell or Otherwise Dispose of Restaurant
Furniture and Equipment 14 on July 8, 1988.

ISSUES
Whether petitioners are liable to respondents for the latter’s share in the partnership

RULING
We hold that respondents have no right to demand from petitioners the return of their equity share.
Except as managers of the partnership, petitioners did not personally hold its equity or assets.
"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.
Partnership Case No. 36

Heirs of Tan Eng Kee, petitioner vs. Court of Tax Appeals, respondents
G.R. No. 126881
October 3, 2000

FACTS
Matilde Abubo, common law spouse of decedent Tan Eng Kee, joined by their children filed an
amended complaint impleading Benguet Lumber Company, as represented by Tan Eng Lay. The
amended complaint claimed that Tan Eng Lay and his children caused the conversion of the
partnership “Benguet Lumber” into a corporation called “Benguet Lumber Company.” The
incorporation was purportedly a ruse to deprive Tan Eng Kee and his heirs of their rightful
participation in the profits of the business. Petitioners prayed for accounting of the partnership
assets, and the dissolution, winding up and liquidation thereof, and the equal division of the net
assets of Benguet Lumber.

The trial court held that Benguet Lumber is a joint venture which is akin to a particular partnership
formed by Tan Eng Kee and Tang Eng Lay. The trial court also declared that the assets of
Benguet Lumber are the same assets turned over to Benguet Lumber Co. Inc. and as such heirs
or legal representatives of the deceased Tan Eng Kee have a legal right to share in said assets.
On appeal, the CA reversed the trial court’s decision on the ground that the petitioners failed to
prove the existence of a partnership; that the decedent is only an employee and that Tan Eng Lay
was only listed owner of the business. Hence, this present decision.

ISSUES
Whether or not Tan Eng Kee and Tan Eng Lay were partners in Benguet Lumber

RULING
No. The SC held that there was no partnership. While the Court acknowledged that an oral and
unwritten partnership may indeed be formed, the Court held that the circumstances in the case at
bar falls short of proving the existence of a partnership. Art. 1769 was applied which enumerated
the rules in determining a partnership. In this case, the best evidence would have been the
contract of partnership itself, or the articles of partnership but there is none. A review of the record
persuades the SC that the Court of Appeals correctly reversed the decision of the trial court.
Besides, it is indeed odd, if not unnatural, that despite the forty years the partnership was allegedly
in existence, Tan Eng Kee never asked for an accounting from his brother, Tang Eng Lay. A
demand for periodic accounting is also evidence of a partnership.

While it can be said that the New Civil Code was still not in effect when the supposed partnership
was formed, the other circumstances still fall short of proving a partnership. Furthermore, the court
held that Tan Eng Kee was only an employee, not a partner. Even if the payrolls as evidence
were discarded, petitioners would still be back to square one, so to speak, since they did not
present and offer evidence that would show that Tan Eng Kee received amounts of money
allegedly representing his share in the profits of the enterprise. Petitioners failed to show how
much their father, Tan Eng Kee, received, if any, as his share in the profits of Benguet Lumber
Company for any particular period. Hence, they failed to prove that Tan Eng Kee and Tan Eng
Lay intended to divide the profits of the business between themselves.

There being no partnership, it follows that there is no dissolution, winding up or liquidation to

speak of.
Partnership Case No. 40

NOBIO SARDANE, petitioner, vs. THE COURT OF APPEALS and ROMEO J. ACOJEDO,
respondents.
G.R. No. L-47045
November 22, 1988

FACTS
Sardane has been engaged in business for quite a long period of time--as owner of the Sardane
Trucking Service. By executing several promissory notes, Sardane borrowed money from Mr.
Acojedo. On the due date, Mr. Acojedo demanded the payment Php 5,217.25 but Sardane failed
to pay the said amount. After so many failed attempts to collect the promised payment, Mr.
Acojedo was prompted to seek legal services and file a case against Sardane. However during
the scheduled date of the trial, Sardane failed to appear. On motion of Mr. Acojedo, the Court
issued an order declaring Sardane in default. Sardane then appealed to the City Court to lift the
order of default which was granted eventually. He then claimed that the promissory notes were
his contribution to the partnership and that there is no contract of loan. Given this, he insisted that
he is not indebted to the other guy. The trial court, believing the arguments of Sardane, ruled on
his favor thereby reversing the decision of the lower court.

ISSUES
Whether or not a partnership existed between the parties.

RULING
None, there is no partnership existed between the parties. It was clearly stated the intent of the
parties to enter into a contract of loan. How could an educated man like the private respondent
be deceived to sign a promissory note yet intending to make such a writing to be mere receipts
of the petitioner's supposed contribution to the alleged partnership existing between the parties?
Thus, it is clear that the amount of money is a provision of loan and not a contribution to a
partnership. In addition, the receipt of 50% of the net profits does not conclusively establish that
he was a partner of the private respondent herein. It is stated in Article 1769(4) of the Civil Code
that while the receipt by a person of a share of the profits of a business is prima facie evidence
that he is a partner in the business, no such inference shall be drawn if such profits were received
in payment as wages of an employee. Furthermore, herein petitioner had no voice in the
management of the affairs.
Partnership Case No. 44

MAURICIO AGAD, petitioner, vs. SEVERINO MABATO and MABATO and

AGAD COMPANY, respondents.
G.R. No. L-24193
June 28, 1968

FACTS
Mauricio Agad and Severino Mabato constituted a partnership in a public instrument to be
engaged in a fish pond business. Agad Contributed Php 1,000 with the right to receive 50% of
the profits. From 1952 up to 1956, Mabato handled the partnership funds and rendered yearly
accounts of the operations of the partnership. However, despite repeated demands, Mabato failed
to render accounts and pay Agad his share in the profits for the years 1957 to 1963.Due to this,
Agad filed a complaint against Mabato and Mabato & Agad Company for the recovery of his share
in the profits of Php 14,000, plus Php 1,000 as attorney’s fees, as well as for the dissolution and
winding up of the partnership. However, Mabato insisted that no partnership had ever existed
since the contract was not perfected because Agad allegedly failed to contribute his Php 1,000
contribution. The court dismissed the complaint since the contract was void for being in violation
of Art. 1773 in because no inventory of the fishpond had been attached with the instrument.

ISSUES
Whether or not the provision of Article 1773 of the Civil Code is applicable to the contract of
partnership on which the complaint herein is based.

RULING
No, Article 1773 is not applicable. It is stated in the public instrument that the partnership was
established “to operate a fishpond” and not to “engage in a fishpond business”. Moreover, no
fishpond or a real right to any was contributed as their contributions were merely limited to P1,
000 each. Hence, the said article cannot be used as a basis for the dismissal of the complaint
since no immovable property or real rights were contributed to begin with.
Partnership Case No. 48

Moran v. Court of Appeals

G.R. No. L-59956
October 31, 1984

FACTS
Moran Jr. and Pecson entered into a partnership agreement for the distribution of colored posters
of the Constitutional Commission wherein each would contribute P15,000.00 as capital, and that
Moran Jr. will print colored posters in the amount of 95,000. Moreover, Pecson will receive a
commission of P1,000 a month starting April 15, 1971, up to December 15, 1971 (8 months).
Ultimately, Pecson contributed only P10,000.00 of the P15,000.00 promised, with Moran Jr. failing
to contribute any amount at all and only printing 2,000 copies of the 95,000.

After the liquidation of accounts, Pecson filed for an action to recover the payment of his share in
the profits that the partnership would have earned and payment of unpaid commission. The CA
awarded P47,500.00 to Pecson for his share in unrealized profits and P8,000.00 commission.
Thus, Moran Jr. appealed that the award his highly speculative and should be avoided and that
the award of the commission has no basis in law.

ISSUES
1. Is the amount of the award for unrealized profits proper?
2. Is the amount of Pecson’s commission proper?

RULING
1. No. The Court held that while Pecson does indeed deserve an award for unrealized profits,
the Court agreed that the amount is highly speculative. In applying Art. 1786 and Art. 2200,
the Court held that an assessment should be made on how profitable the business venture
would be. In the case at hand, there is no evidence that the partnership would have been a
profitable venture – as in fact it was considered “doomed from the start”.

Furthermore, the Court made notice of the fact that: 1) There was a mutual breach of the
agreement since Pecson merely paid P10,000.00 of the P15,000; 2) The COMELEC failed to
proclaim all 320 Constitutional Commission candidates on time and 3) The existence of hidden
risks as with any business venture.

Thus, the Court further applied Art. 1797 and that each partner must share in the profits and
the losses of the venture. Moreover, even with the assurance made by one of the partners
that they would earn a huge amount of profits, in the absence of fraud, a partner cannot
recover highly speculative profits.

Nevertheless, the partnership earned P6,000.00 as net profit should be divided between
Pecson and Moran, Jr. And since opnly P4,000.00 was undesirable by the petitioner in printing
the 2,000 copies, the remaining P6,000.00 should be returned to Pecson.
2. No. The Court held that while the agreement did indeed stipulate a P1, 000.00 commission
every month, which would make the P8,000.00 award proper in theory, the agreement does
not state the basis of commission. Thus, the payment of the commission could only have been
predicated on extravagant profits. The partnership could not have intended the giving of
commission despite loss or failure of the venture. Thus, since the partnership was a failure,
Pecson is not entitled to the said commission.
Partnership Case No. 52

Lim Tanhu vs. Ramolete

66 SCRA 425

FACTS
Tan Put, the respondent, alleged that she is the widow of Tee Hoon Lim Po Chuan. The latter is
a partner and has a controlling interest Glory Commercial Company. He is also a Chinese Citizen
until his death. Antonio Lim Tanhu and Alfonso Leonardo Ng Sua, the defendants, were partners
in name but they were mere employees of Po Chuan. The defendants were naturalized Filipino
Citizens. Tan Put filed a complaint to the petitioners, their spouses and their son that they
allegedly took actual and active management of the partnership through fraud. Also, she demands
entitlement for shares in the capital, profits and other assets, real and personal, of the partnership.

The petitioners argued that Ang Siok Tin is the legal wife of Po Chuan and has 4 legitimate
children. The legitimate wife and children were all presiding in Hong Kong and were given what
corresponded to Po Chuan when the partnership was dissolved.

On the other hand, before the alleged marriage of Tan Put to Tee Hoon, Tan Put sold her
drugstore for P125,000.00 upon the suggestion of Tee Hoon. This amount was then used as an
investment to Glory Commercial Co. by her husband in which the aforementioned business
flourished after the said investment.

The defendants also interposed that Tan Put was aware of the other wife and was merely the
common-law wife of Tee Hoon. They were also childless but Tan Put had a foster child which is
Antonio Nunez

ISSUE
Whether or not Tan Put can claim Tee Hoon’s share from the company.

RULING
No. An agreement was shown that they terminated their common-law marriage which is signed
by Tan Put and that she received P40,000 for her subsistence. It is also stated that they promised
not to interfere with each other’s affairs. Thus, this shows that they had settled property interests
with the payment of P40,000.

Petition granted. Costs against private respondent.

Partnership Case No. 56

ELMO MUÑASQUE, petitioner, vs. COURT OF APPEALS, CELESTINO GALAN TROPICAL

COMMERCIAL COMPANY and RAMON PONS, respondents.
FACTS

Munasque, in behalf of the partnership of “Galan and Munasque” as contractor, entered into a
contract with the respondent Tropical for remodeling the latter’s Cebu Branch building. A total
amount of 25,000 would be paid to petitioner which shall be made by installment and through
giving of a check. The first payment, in the form of check was in the name of petitioner. The latter
indorsed the same to Galan which enabled the latter to encash the same. It was allegedly used
by Galan for his personal matters. Because of this, the second check amounting to 6,000, which
was indorsed to the petitioner, was not indorsed by the latter to Galan. Thereafter, a check was
issued again by Tropical but this time, the payee is “Galan and Associate” because Galan said
that there is a misunderstanding between him and Munasque. This enabled Galan to encash the
second check. Because of this, the petitioner continued the construction. He borrowed from his
friend certain sum of money for the said construction. Then, the 2 remaining checks were given
to the petitioner. The latter filed a complaint for payment of sum of money and damages against
respondents (Tropical, Cebu Manager, and Galan) RTC and Ca absolved the respondents and
held petitioner jointly liable with Galan to pay the intervenors (Cebu Southern Hardware Company
and Blued Diamond Glass Palace) for the credits extended by the latter. Petitioner contends that
he should not be liable as he is not a partner of Galan and that the payment made by Tropical to
Galan was erroneous.

ISSUES
Whether there was a partnership between Galan and Munasque

RULING
Yes. The contract that petitioner entered into with Tropical clearly shows that he is undertaking
the renovation of the building on behalf of the partnership Galan and Munasque. Further, the act
of petitioner of endorsing the check (first payment) to Galan clearly shows that the latter was his
partner. Further, CA was correct in holding that the payment made to Galan was a valid payment
since the parties presented themselves as partners. The misunderstanding between the two does
not make the partnership a sham or defective partnership.
Partnership Case No. 60

SANTIAGO SYJUCO, INC v. CASTRO

G.R. No. 70403
July 7, 1989

FACTS
Eugenio Lim, et al., private respondents, borrowed P800,000.00 from petitioner Santiago Syjuco,
Inc. The loan was secured by a first mortgage on property recorded in the names of the borrowers
as owners in common under the Registry of Deeds of Manila's Transfer Certificates of Title
Numbers 75413 and 75415.

Following that, the private respondents received more loans from Syjuco on the same security,
increasing the total of the loans to P2,460,000.00, exclusive of interest, as of May 8, 1967, and
the security had been supplemented by adding more property into the mortgage. TCT Nos. 75416
and 75418 of the Manila Registry were likewise registered as owned pro indiviso by the private
respondents.

Syjuco requested that the Sheriff of Manila initiate extrajudicial foreclosure procedures for the
mortgage after the private respondents refused to pay on repeated demands. On December 27,
1968, the auction sale of the mortgaged property was arranged.

One of the private respondents' complaints was filed in the name of a partnership in which they
were the sole partners: "Heirs of Hugo Lim." The case argued that the mortgage that they and
their mother had individually created (and then revised between 1964 and 1967) over lands
registered in their names as owners pro indiviso in the Property Registry was invalid. Because
the land was no longer theirs at the time, having been deeded over to the partnership, "Heirs of
Hugo Lim," on March 30, 1959, said mortgage was void because it was performed without the
partnership's permission.

After Syjuco filed a certiorari, prohibition, and mandamus petition right away, Judge Castro's
default decision against it to be overturned on the grounds of estoppel, res judicata, and Article
1819 of the Civil Code.

ISSUE
Whether or not the private respondents are estopped to avoid the aforementioned mortgage.

RULING
Yes. The Supreme Court held that the respondent partnership was unavoidably liable with
knowledge of the mortgage executed by all of its partners, and that its silence and failure to
challenge the mortgage for over 17 years, invoked the doctrine of estoppel to bar any attempt to
avoid the mortgage as allegedly unlawful.

The last paragraph of Art. 1819 of the Civil Code states, ‘where the title to real property is in the
names of all the partners, a conveyance executed by all of the partners passes all of their rights
in such property,' means the respondent partnership's claim to the mortgaged property is similarly
preclusive, if not more so.

As a result, those members' actions, statements, and omissions cannot be considered solely their
own, but rather the partnership's in fact and law. The Supreme Court underlines that the private
respondents' right to argue the partnership's existence may have been emphasized when they
filed their first action, because the proceedings concerned property allegedly belonging to it, and
so the partnership was the genuine party in interest. They subdivided their cause of action that is
against the well-established regulation that the only lawsuit can indeed be brought for a single
liability.
Partnership Case No. 64

GREGORIO MAGDUSA, ET AL., petitioners, vs. GERUNDIO ALBARAN, ET

AL., respondents.
G.R. No. L-17526
June 30, 1962

FACTS
Appellant and appellees, together with various other persons, had verbally formed a partnership
de facto for the sale of general merchandise in Surigao, to which appellant contributed P2,000 as
capital, and the others contributed their labor, under the condition that out of the net profits of the
business 25% would be added to the original capital, and the remaining 75% would be divided
among the members in proportion to the length of service of each.The appellees expressed their
desire to withdraw from the partnership, and appellant thereupon made acomputation (exhibit C)
to determine the value of the partners' shares to that date.Appellees thereafter made demands
upon appellant for payment, but appellant having refused, they filed the initial complaint in the
court.

ISSUE
Whether or not appellees' action can be entertained, because in the distribution of all or part of a
partnership's assets, all the partners have no interest and are indispensable parties without whose
intervention no decree of distribution can be validly entered.

RULING
It cannot be entertained. A partner's share cannot be returned without first dissolving and
liquidating the partnership, for the return is dependent on the discharge of the creditors, whose
claims enjoy preference over those of the partners; and it is self-evident that all members of the
partnership are interested in his assets and business, and are entitled to be heard in the matter
of the firm's liquidation and the distribution of its property. The liquidation drawn by appellant is
not signed by the other members of the partnership besides appellees and appellant; it does not
appear that they have approved, authorized, or ratified the same, and, therefore, it is not binding
upon them. At the very least, they are entitled to be heard upon its correctness.

In addition, unless a proper accounting and liquidation of the partnership affairs is first had, the
capital shares of the appellees, as retiring partners, cannot be repaid, for the firm's outside
creditors have preference over the assets of the enterprise, and the firm's property can not be
diminished to their prejudice. Finally, the appellant cannot be held liable in his personal capacity
for the payment of partners' shares for he does not hold them except as manager of, or trustee
for, the partnership. It is the latter that must refund their shares to the retiring partners. Since not
all the members of the partnership have been impleaded, no judgment for refund can be rendered.