SUMMARY OF THE PROVISIONS 1767-1827 GENERAL PROVISIONS 1767. 1768. 1769. 1770. 1771. 1772. 1773. 1774. 1775.

1776. 1777. 1778. 1779. 1780. 1781. 1782. 1783. Concept of partnership partnership as a juridical person rules to determine existence of partnership object or purpose of partnership form of partnership contract registration of partnership partnership with contribution of IMMOVABLE property acquisition or conveyance of property by partnership Secret partnerships without juridical personality Classifications of partnership Kinds of universal partnership Partnership of all present property Universal partnership of all present property Universal partnership of profits Presumption in favor of universal partnership of profits Limitations upon the right to form a partnership Particular partnership explained OBLIGATIONS OF THE PARTNERS OBLIGATIONS OF THE PARTNERS AMONG THEMSELVES 1784. 1785. 1786. 1787. 1788. 1789. 1790. 1791. 1792. 1793. 1794. 1795. 1796. 1797. 1798. 1799. 1800. 1801. 1802. 1803. 1804. 1805. 1806. 1807. 1808. 1809. Commencement and term of partnership Continuation of partnership beyond fixed term Obligations with respect to contribution of property Appraisal of goods or property contributed Obligations with respect to contribution of money and money converted to personal use Obligations of industrial partner Extent of contribution to partnership capital Obligation of capitalist partner to contribute additional capital Obligation of managing partner who collects debt Obligation of partner who receives share of partnership credit Obligation of partner for damages to partnership Risk of loss of things contributed Responsibility of the partnership to the partners Rules for distribution of profits and losses rd Designation by a 3 person of share in profits and losses Stipulation excluding a partner from any share in the profits or losses Rights and obligations with respect to management Where respective duties of 2 or more managing partners not specified When unanimity of action stipulated Rules when manner of management has not been agreed upon Contract of subpartnership Keeping of partnership books Duty to render information Partner accountable as fiduciary Prohibition against partner engaging in business Right of partner to a formal account PROPERTY RIGHTS OF A PARTNER 1810. 1811. 1812. 1813. 1814. Extent of property rights of a partner Nature of partners right in SPECIFIC partnership property Nature f partners INTEREST in the partnership Effect of assignment of partners whole interest in partnership Remedies of separate judgment creditor of a partner OBLIGATIONS OF THE PARNTERS WITH REGARD TO 3 1815. 1816. 1817. 1818. 1819. 1820. 1821. 1822. 1823. 1824. 1825. 1826.
RD

PERSONS

Requirement of a firm name Liability for contractual obligations of the partnership Stipulation against liability Power of partner as agent of partnership Effects of conveyance of real property belonging to the partnership Effects of admission by a partner Notice to, or knowledge of a partner of matter affecting partnership affairs Liability of partnership for act or omission of a partner When partnership is bound to make good the loss Liability arising from partners tort or breach of trust Partner by estoppel and partnership by estoppel Liability of incoming partner for partnership obligations

1827. Preference of partnership creditors in partnership property 1767: DELECTUS PERSONAE 1. PASCUAL V. CASale of parcel of lands made by a person and CIR assessed taxes saying that it must pay for corporate income taxes because the acts performed by the partner was one act constituting act of partnership. Defense: co-ownership lang daw. HELD:NO PARTNERSHIP. In determining whether a relationship is a partnership is to determine the INTENT OF THE PARTIES. the fact that those who agree to form a co- ownership share or do not share any profits made by the use of the property held in common does not convert their venture into a partnership. Or the sharing of the gross returns does not of itself establish a partnership whether or not the persons sharing therein have a joint or common right or interest in the property. This only means that, aside from the circumstance of profit, the presence of other elements constituting partnership is necessary, such as the clear intent to form a partnership, the existence of a juridical personality different from that of the individual partners, and the freedom to transfer or assign any interest in the property by one with the consent of the others in order to constitute a partnership inter sese there must be: (a) An intent to form the same; (b) generally participating in both profits and losses; (c) and such a community of interest, as far as third persons are concerned as enables each party to make contract, manage the business, and dispose of the whole property.There must be a clear intent to form a partnership, the existence of a juridical personality different from the individual partners, and the freedom of each party to transfer or assign the whole property. In the present case, there is clear evidence of co-ownership between the petitioners. There is no adequate basis to support the proposition that they thereby formed an unregistered partnership. The two isolated transactions whereby they purchased properties and sold the same a few years thereafter did not thereby make them partners. They shared in the gross profits as co- owners and paid their capital gains taxes on their net profits and availed of the tax amnesty thereby. Under the circumstances, they cannot be considered to have formed an unregistered partnership which is thereby liable for corporate income tax, as the respondent commissioner proposes. Note: this case was also distinguished from case of evangelista. In that case, The number of lots (24) acquired and transactions undertaken, as well as the brief interregnum between each, particularly the last three purchases, is strongly indicative of a pattern or common design that was not limited to the conservation and preservation of the aforementioned common fund or even of the property acquired by petitioners in February, 1943. In other words, one cannot but perceive a character of habituality peculiar to business transactions engaged in for purposes of gain. Contribution of money, property, industry 2. ESTANISLAO V. CALease of a property. Siblings agreed to operate a gas station and petitioner estanislao was tasked to manage the gas station. HELD: There is a PARTNERSHIP. Moreover other evidence in the record shows that there was in fact such partnership agreement between the parties. This is attested by the testimonies of private respondent Remedies Estanislao and Atty. Angeles. Petitioner submitted to private respondents periodic accounting of the 4 business. Petitioner gave a written authority to private respondent Remedies Estanislao, his sister, to examine 5 and audit the books of their "common business' aming negosyo). Respondent Remedios assisted in the running of the business. There is no doubt that the parties hereto formed a partnership when they bound themselves to contribute money to a common fund with the intention of dividing the profits among 6 themselves. The sole dealership by the petitioner and the issuance of all government permits and licenses in the name of petitioner was in compliance with the afore-stated policy of SHELL and the understanding of the parties of having only one dealer of the SHELL products. Legality of object 3. ANG PUE V. SECRETARYThe partners here are CHINESE. Their partnership was considered valid before RA 1180 but by its enactment, it was already refused registration. To allow so is going to be UNLAWFUL. To organize a corporation or a partnership that could claim a juridical personality of its own and transact business as such, is not a matter of absolute right but a privilege which may be enjoyed only under such terms as the State may deem necessary to impose. That the State, through Congress, and in the manner provided by law, had the right to enact Republic Act No. 1180 and to provide therein that only Filipinos and concerns wholly owned by Filipinos may engage in the retail business cannot be seriously disputed. That this provision was clearly intended to apply to partnership already existing at the time of the enactment of the law is clearly showing by its provision giving them the right to continue engaging in their retail business until the expiration of their term or life. To argue that because the original articles of partnership provided that the partners could extend the term of the partnership, the provisions of Republic Act 1180 cannot be adversely affect appellants herein, is to erroneously assume that the aforesaid provision constitute a property right of which the partners cannot be deprived without due process or without their consent. The agreement contain therein must be deemed subject to the law existing at the time when the partners came to agree regarding the extension . In the present case, as already stated, when the partners amended the articles of partnership, the provisions of Republic Act 1180 were already in force, and there can be not the slightest doubt that the right claimed by appellants to extend the original term of their partnership to another five years would be in violation of the clear intent and purpose of the law aforesaid . Sharing of profits 4. OBILLOS V. CIRTHERE WAS NO PARTNERSHIP. SC considered the intent of the parties. Their original purpose was to divide the lots for residential purposes. If later on they found it not feasible to build their

5.

residences on the lots because of the high cost of construction, then they had no choice but to resell the same to dissolve the co-ownership. The division of the profit was merely incidental to the dissolution of the co-ownership which was in the nature of things a temporary state. It had to be terminated sooner or later. LIM TONG LIM V. PHILIPPINE FISHING GEARthe agreement that was mentioned that lim tong lim was not a signatory thereto. He did not sign daw so he is not the partner. But that is not the only thing to look at. There was a PARTNERSHIP. it is clear that the partnership extended not only to the purchase of the boat, but also to that of the nets and the floats. The fishing nets and the floats, both essential to fishing, were obviously acquired in furtherance of their business. It would have been inconceivable for Lim to involve himself so much in buying the boat but not in the acquisition of the aforesaid equipment, without which the business could not have proceeded. From the factual findings of both lower courts, it is clear that Chua, Yao and Lim had decided to engage in a fishing business, which they started by buying boats worth P3.35 million, financed by a loan secured from Jesus Lim who was petitioner's brother. In their Compromise Agreement, they subsequently revealed their intention to pay the loan with the proceeds of the sale of the boats, and to divide equally among them the excess or loss. These boats, the purchase and the repair of which were financed with borrowed money, fell under the term "common fund" under Article 1767. The contribution to such fund need not be cash or fixed assets; it could be an intangible like credit or industry. That the parties agreed that any loss or profit from the sale and operation of the boats would be divided equally among them also shows that they had indeed formed a partnership. Petitioner Was a Partner,Not a Lessor--We are not convinced by petitioner's argument that he was merely the lessor of the boats to Chua and Yao, not a partner in the fishing venture. His argument allegedly finds support in the Contract of Lease and the registration papers showing that he was the owner of the boats, including F/B Lourdes where the nets were found. His allegation defies logic. In effect, he would like this Court to believe that he consented to the sale of his own boats to pay a debt of Chua and Yao, with the excess of the proceeds to be divided among the three of them. No lessor would do what petitioner did. Indeed, his consent to the sale proved that there was a preexisting partnership among all three.

1768partnership as a juridical person 1. AGUILA V. CA remember the rule in 1768. What was done here was that it was the partner that was impleaded in this case instead of the partnership. It could have been possible if proof was shown that the partnership was for a fraudulent purpose or for an unfair prupose but no evidence was presented with regard thereto. Case was dismissed on the ground that action was not in the name of the real party in interest. Hence, it is the partnership, not its officers or agents, which should be impleaded in any litigation involving property registered in its name. A [11] violation of this rule will result in the dismissal of the complaint. We cannot understand why both the Regional Trial Court and the Court of Appeals sidestepped this issue when it was squarely raised before them by petitioner. Our conclusion that petitioner is not the real party in interest against whom this action should be prosecuted makes it unnecessary to discuss the other issues raised by him in this appeal. 1769: co-ownership or co-possession 1. ONA V. CIR it is Our considered view that from the moment petitioners allowed not only the incomes from their respective shares of the inheritance but even the inherited properties themselves to be used by Lorenzo T. Oa as a common fund in undertaking several transactions or in business, with the intention of deriving profit to be shared by them proportionally, such act was tantamonut to actually contributing such incomes to a common fund and, in effect, they thereby formed an unregistered partnership within the purview of the above-mentioned provisions of the Tax Code. It is true that in Evangelista vs. Collector, 102 Phil. 140, it was stated, among the reasons for holding the appellants therein to be unregistered co-partners for tax purposes, that their common fund "was not something they found already in existence" and that "it was not a property inherited by them pro indiviso," but it is certainly far fetched to argue therefrom, as petitioners are doing here, that ergo, in all instances where an inheritance is not actually divided, there can be no unregistered co-partnership. As already indicated, for tax purposes, the coownership of inherited properties is automatically converted into an unregistered partnership the moment the said common properties and/or the incomes derived therefrom are used as a common fund with intent to produce profits for the heirs in proportion to their respective shares in the inheritance as determined in a project partition either duly executed in an extrajudicial settlement or approved by the court in the corresponding testate or intestate proceeding. The reason for this is simple. From the moment of such partition, the heirs are entitled already to their respective definite shares of the estate and the incomes thereof, for each of them to manage and dispose of as exclusively his own without the intervention of the other heirs, and, accordingly he becomes liable individually for all taxes in connection therewith. If after such partition, he allows his share to be held in common with his co-heirs under a single management to be used with the intent of making profit thereby in proportion to his share, there can be no doubt that, even if no document or instrument were executed for the purpose, for tax purposes, at least, an unregistered partnership is formed. This is exactly what happened to petitioners in this case. Besides, as already observed earlier, the income derived from inherited properties may be considered as individual income of the respective heirs only so long as the inheritance or estate is not distributed or, at least, partitioned, but the moment their respective known shares are used as part of the common assets of the heirs to be used in making profits, it is but proper that the income of such shares should be considered as the part of the taxable income of an unregistered partnership. 1769: Test and incidents fo partnership 1. SARDANE V. CA-- ISSUE: whether or not Sardane is a partner in a partnership thus the debts in issue are partnership contributions? HELD: No. The Court of Appeals held, and still the evidence is insufficient to prove that a partnership existed between the private parties hereto. As manager of the basnig Sarcado

naturally some degree of control over the operations and maintenance thereof had to be exercised by herein petitioner. The fact that he had received 50% of the net profits does not conclusively establish that he was a partner of the private respondent herein. Article 1769(4) of the Civil Code is explicit 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 of the basnig. Under similar facts, this Court in the early case of Fortis vs. Gutierrez Hermanos, in denying the claim of the plaintiff therein that he was a partner in the business of the defendant, declared: This contention cannot be sustained. It was a mere contract of employment. The plaintiff had no voice nor vote in the management of the affairs of the company. The fact that the compensation received by him was to be determined with reference to the profits made by the defendant in their business did not in any sense make him a partner therein. ... There are other considerations noted by respondent Court which negate herein petitioner's pretension that he was a partner and not a mere employee indebted to the present private respondent. Also, although he contends that herein private respondent is the treasurer of the alleged partnership, yet it is the latter who is demanding an accounting. The advertence of the Court of First Instance to the fact that the casco bears the name of herein petitioner disregards the finding of the respondent Court that it was just a concession since it was he who obtained the engine used in the Sardaco from the Department of Local Government and Community Development. Further, the use by the parties of the pronoun "our" in referring to "our basnig, our catch", "our deposit", or "our boseros" was merely indicative of the camaraderie and not evidentiary of a partnership, between them. G.R. No. 31057 September 7, 1929 ADRIANO ARBES, ET AL., plaintiffs-appellees, vs. VICENTE POLISTICO, ET AL., defendants-appellants.

Facts: This is an action to bring about liquidation of the funds and property of the association called "Turnuhan Polistico & Co." The plaintiffs were members or shareholders, and the defendants were designated as presidenttreasurer, directors and secretary of said association. It is well to remember that this case is now brought before the consideration of this court for the second time. The first one was when the same plaintiffs appeared from the order of the court below sustaining the defendant's demurrer, and requiring the former to amend their complaint within a period, so as to include all the members of "Turnuhan Polistico & Co.," either as plaintiffs or as a defendants. This court held then that in an action against the officers of a voluntary association to wind up its affairs and enforce an accounting for money and property in their possessions, it is not necessary that all members of the association be made parties to the action.

Issues: (1) That not all persons having an interest in this association are included as plaintiffs or defendants; (2) that the objection to the commissioner's report should have been admitted by the court below. Held: There is no question that "Turnuhan Polistico & Co." is an unlawful partnership, but the appellants allege that because it is so, some charitable institution to whom the partnership funds may be ordered to be turned over, should be included, as a party defendant. Appellant's contention on this point is untenable. According to said article, no charitable institution is a necessary party in the present case of determination of the rights of the parties. The action which may arise from said article, in the case of unlawful partnership, is that for the recovery of the amounts paid by the member from those in charge of the administration of said partnership, and it is not necessary for the said parties to base their action to the existence of the partnership, but on the fact that of having contributed some money to the partnership capital. And hence, the charitable institution of the domicile of the partnership, and in the default thereof, those of the province are not necessary parties in this case. The article cited above permits no action for the purpose of obtaining the earnings made by the unlawful partnership, during its existence as result of the business in which it was engaged, because for the purpose, as Manresa remarks, the partner will have to base his action upon the partnership contract, which is to annul and without legal existence by reason of its unlawful object; and it is self evident that what does not exist cannot be a cause of action. Hence, paragraph 2 of the same article provides that when the dissolution of the unlawful partnership is decreed, the profits cannot inure to the benefit of the partners, but must be given to some charitable institution Sunga-Chan vs Chua Facts: Lamberto Chua verbally entered into a partnership with Jacinto Sunga for the distribution of Shellane LPG. For business convenience, they agreed to register the business name of their partnership, Shellite Gas Appliance Center under the name of Jacinto as a sole proprietorship. Both contributed 100k each and agreed that any profits will be divided equally among them. The management of the business was entrusted to Jacinto and Chuas sister in law, Josephine. For their management, Jacinto was to receive 10% of the gross profits and Josephine 10% of the net profits. Upon Jacintos death, Cecilia and Lilibeth (petitioners - Jacintos wife and daughter) took over the management of Shellite without Chuas consent. Chua demanded accounting, inventory, appraisal, winding up and restitution of his

net shared in the partnership however petitioners failed to comply. Hence, Chua filed a complaint for Winding up of partnership affairs, accounting, appraisal and recover y of shares and damages with preliminary attachment. Trial court ruled in favor of Chua and ordered petitioners herein to render and accounting, return and restitute to the partnership any properties which they have misapplied, restitute Chua his share and to wind up the partnership. Petitioners questioned the finding of the TC and the CA that a partnership had existed since there is no written agreement to prove the same and the testimony of Josephine falls within the proscription of the Dead Mans Statute. Petitioners further argued that assuming there is in fact a partnership, the same is not valid because it is not registered with the SEC as required by Art 1772. Issue: W/N there a partnership existed. W/N non registration affects the validity of the partnership. Held: A partnership may be constituted in any form, except where immovable property of real rights are contributed 6 thereto, in which case a public instrument shall necessary. Hence, based on the intention of the parties, as gathered 7 from the facts and ascertained from their language and conduct, a verbal contract of partnership may arise. The essential profits that must be proven to that a partnership was agreed upon are (1) mutual contribution to a common 8 stock, and (2) a joint interest in the profits. Understandably so, in view of the absence of the written contract of partnership between Chua and Jacinto, Chua resorted to the introduction of documentary and testimonial evidence to prove said partnership. In a desperate bid to cast doubt on the validity of the oral partnership between respondent and Jacinto, petitioners maintain that said partnership that had initial capital of P200,000.00 should have been registered with the Securities and Exchange Commission (SEC) since registration is mandated by the Civil Code, True, Article 1772 of the Civil Code requires that partnerships with a capital of P3,000.00 or more must register with the SEC, however, this 25 registration requirement is not mandatory. Article 1768 of the Civil Code explicitly provides that the partnership retains its juridical personality even if it fails to register. The failure to register the contract of partnership does not invalidate the same as among the partners, so long as the contract has the essential requisites, because the main purpose of registration is to give notice to third parties, and it can be assumed that the members themselves knew of 26 the contents of their contract. In the case at bar, non-compliance with this directory provision of the law will not invalidate the partnership considering that the totality of the evidence proves that respondent and Jacinto indeed forged the partnership in question. *With regards to Dead Mans Statute, SC held that the counterclaims filed by petitioners removed the case from the ambit of the Dead Mans Statute. Well entrenched is the rule that when it is the executor or administrator or representatives of the estates that sets up the counterclaim, the plaintiff, herein respondent, may testify to 13 occurrences before the death of the deceased to defeat the counterclaim. Moreover, as defendant in the counterclaim, respondent is not disqualified from testifying as to matters of facts occurring before the death of the 14 deceased, said action not having been brought against but by the estate or representatives of the deceased. Second, the testimony of Josephine is not covered by the "Dead Man's Statute" for the simple reason that she is not "a party or assignor of a party to a case or persons in whose behalf a case is prosecuted." Records show that respondent offered the testimony of Josephine to establish the existence of the partnership between respondent and Jacinto. Petitioners' insistence that Josephine is the alter ego of respondent does not make her an assignor because the term "assignor" of a party means "assignor of a cause of action which has arisen, and not the assignor of a right 15 assigned before any cause of action has arisen." Plainly then, Josephine is merely a witness of respondent, the latter being the party plaintiff. 1773-ANTONIA TORRES, assisted by her husband, ANGELO TORRES; and EMETERIA BARING, vs. COURT OF APPEALS and MANUEL TORRES, [G.R. No. 134559. December 9, 1999] FACTS: In 1969, sisters Antonia Torres and Emeteria Baring entered into a joint venture agreement with Manuel Torres. Under the agreement, the sisters agreed to execute a deed of sale in favor Manuel over a parcel of land, the sisters received no cash payment from Manuel but the promise of profits (60% for the sisters and 40% for Manuel) said parcel of land is to be developed as a subdivision. Manuel then had the title of the land transferred in his name and he subsequently mortgaged the property. He used the proceeds from the mortgage to start building roads, curbs and gutters. Manuel also contracted an engineering firm for the building of housing units. But due to adverse claims in the land, prospective buyers were scared off and the subdivision project eventually failed. The sisters then filed a civil case against Manuel for damages equivalent to 60% of the value of the property, which according to the sisters, is whats due them as per the contract. The lower court ruled in favor of Manuel and the Court of Appeals affirmed the lower court. The sisters then appealed before the Supreme Court where they argued that there is no partnership between them and Manuel because the joint venture agreement is void. ISSUE: Whether or not there exists a partnership. HELD: Yes. The joint venture agreement the sisters entered into with Manuel is a partnership agreement whereby they agreed to contribute property (their land) which was to be developed as a subdivision. While on the other hand, though Manuel did not contribute capital, he is an industrial partner for his contribution for general expenses and other costs. Furthermore, the income from the said project would be divided according to the stipulated percentage (60-40). Clearly,

the contract manifested the intention of the parties to form a partnership. Further still, the sisters cannot invoke their right to the 60% value of the property and at the same time deny the same contract which entitles them to it. As to the alleged nullity of the Partnership Agreement, Petitioners argue that the Joint Venture Agreement is void under Article 1773 of the Civil Code: ART. 1773. A contract of partnership is void, whenever immovable property is contributed thereto, if an inventory of said property is not made, signed by the parties, and attached to the public instrument. They contend that since the parties did not make, sign or attach to the public instrument an inventory of the real property contributed, the partnership is void. We clarify. First, Article 1773 was intended primarily to protect third persons. Thus, the eminent Arturo M. Tolentino states that under the aforecited provision which is a complement of Article 1771,[12] the execution of a public instrument would be useless if there is no inventory of the property contributed, because without its designation and description, they cannot be subject to inscription in the Registry of Property, and their contribution cannot prejudice third persons. This will result in fraud to those who contract with the partnership in the belief [in] the efficacy of the guaranty in which the immovables may consist. Thus, the contract is declared void by the law when no such inventory is made. The case at bar does not involve third parties who may be prejudiced.

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

In short, the alleged nullity of the partnership will not prevent courts from considering the Joint Venture Agreement an ordinary contract from which the parties rights and obligations to each other may be inferred and enforced.

At any rate, the failure of the partnership cannot be blamed on the sisters, nor can it be blamed to Manuel (the sisters on their appeal did not show evidence as to Manuels f ault in the failure of the partnership). The sisters must then bear their loss (which is 60%). Manuel does not bear the loss of the other 40% because as an industrial partner, he is exempt from losses. G.R. No. L-25532 February 28, 1969 COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. WILLIAM J. SUTER and THE COURT OF TAX APPEALS, respondents. A limited partnership, named "William J. Suter 'Morcoin' Co., Ltd.," was formed in 1947 by William J. Suter as the general partner, and Julia Spirig and Gustav Carlson, as the limited partners. The partners contributed, respectively, P20,000.00, P18,000.00 and P2,000.00 to the partnership. The firm engaged, among other activities, in the importation, marketing, distribution and operation of automatic phonographs, radios, television sets and amusement machines, their parts and accessories. In 1948, however, general partner Suter and limited partner Spirig got married and, thereafter, limited partner Carlson sold his share in the partnership to Suter and his wife. The limited partnership had been filing its income tax returns as a corporation. In 1959, the Commissioner, in an assessment, consolidated the income of the firm and the individual incomes of the partners-spouses Suter and Spirig resulting in a determination of a deficiency income tax against respondent Suter. ISSUES: (a) Whether or not the corporate personality of the William J. Suter "Morcoin" Co., Ltd. should be disregarded for income tax purposes, considering that respondent William J. Suter and his wife, Julia Spirig Suter actually formed a single taxable unit; and (b) Whether or not the partnership was dissolved after the marriage of the partners, respondent William J. Suter and Julia Spirig Suter and the subsequent sale to them by the remaining partner, Gustav Carlson, of his participation of P2,000.00 in the partnership for a nominal amount of P1.00. SC: (a) CIR has evidently failed to observe the fact that the partnership was not a universal partnership, but a particular one. A universal partnership requires either that the object of the association be all the present property of the partners, as contributed by them to the common fund, or else "all that the partners may acquire by their industry or work during the existence of the partnership". William J. Suter "Morcoin" Co., Ltd. was not such a universal partnership, since the contributions of the partners were fixed sums of money, P20,000.00 by William Suter and P18,000.00 by Julia Spirig and neither one of them was an industrial partner. It follows that William J. Suter "Morcoin" Co., Ltd. was not a partnership that spouses were forbidden to enter by Article 1677 of the Civil Code of 1889. The appellant's view, that by the marriage of both partners the company became a single proprietorship, is equally erroneous. The capital contributions of partners William J. Suter and Julia Spirig were separately owned and contributed by them before their marriage; and after they were joined in wedlock, such contributions remained their respective separate property under the Spanish Civil Code (Article 1396): The following shall be the exclusive property of each spouse: (a) That which is brought to the marriage as his or her own; ....

Thus, the individual interest of each consort in the partnership did not become common property of both after their marriage in 1948. The change in its membership, brought about by the marriage of the partners and their subsequent acquisition of all interest therein, is no ground for withdrawing the partnership from the coverage of Section 24 of the tax code, requiring it to pay income tax. The code (NIRC) taxes a limited partnership on its income, but not a general copartnership ( compaia colectiva), because it is in the case of compaias colectivas that the members, and not the firm, are taxable in their individual capacities for any dividend or share of the profit derived from the duly registered general partnership. (b) The fi rm was not a universal partnership, but a particular one. It follows that the partnership was not one that A and B were forbidden to enter under Article 1677. (now Art. 1782.) Nor could the subsequent marriage of the partners operate to dissolve it, such marriage not being one of the causes provided for that purpose by law. Aurbach vs Sanitary Wares 180 s 130 Facts: Saniwares, a domestic corporation was incorporated for the primary purpose of manufacturing and marketing sanitary wares. ASI a foreign corporation domiciled in Delaware, United States entered into an Agreement with Saniwares and some Filipino investors whereby ASI and Filipino investors agreed to participate in the ownership of an enterprise which would engage primarily in the business of manufacturing in the Philippines and selling here and abroad vitreous china and sanitary wares. Unfortunately, with business successes, there came a deterioration of the initially harmonious relations between the two groups. During the annual stockholders proceeded to the election of the members of the board of directors. The ASI group nominated three persons. The Philippine investors nominated six. However, additional two nominations were made which were declared by the chairman as out of order on the basis on their agreement. There were protest against the action of the chairman and heated arguments ensued. These incidents triggered off the filing of separate petitions by the parties with the Securities and Exchange Commission (Sec.) The first petition filed was for preliminary injunction by Ladameo Group against Luciano Salazar and Charles Chamsay. The second petition was for quo warranto and application for receivership by Wolfgang Aurbach group against the group of young and Lagdameo. Bothe sets of parties claimed to be the legitimate directors of the corporation. The SEC decision led to the filling of two separate appeals which hinges on who really were the duly elected directors of Saniware during its annual stockholders meeting in which can be by answered by determining the nature of the business established by the parties-whether it was a joint venture or a corporation. Issue: whether or not the nature of business established was joint venture or a corporation? Held: Joint venture The rule is that whether the parties to a particular contract have thereby established among themselves a joint venture or some other relation depends upon their actual Sintention which is determined in accordance with the rule governing the interpretation and construction of contracts. In the instant cases, examination of important provisions of the Agreement as well as the testimonial evidence presented by the Lagdameo and Young Group shows that the parties agreed to establish a joint venture and not a corporation. The history of the organization of Saniwares and the unusual arrangements which govern its policy making body are all consistent with a joint venture and not with an ordinary corporation. Under Philippines Law, a joint venture is a form of partnership and should thus be govern by the Law of partnerships. The Supreme Court has however recognized a distinction between this two business forms, and has held that although a corporation cannot enter into a partnership contract, it may however engage a joint venture with others. HEIRS OF TAN ENG KEE V. CA FACTS: Following the death of Tan Eng Kee in 1984, Matilde Abubo, the common-law spouse of the decedent, joined by their children Teresita, Nena, Clarita, Carlos, Corazon and Elpidio, collectively known as herein petitioners HEIRS OF TAN ENG KEE, filed suit against the decedent's brother TAN ENG LAY on February 19, 1990 for accounting, liquidation and winding up of the alleged partnership formed after World War II between Tan Eng Kee and Tan Eng Lay. On March 18, 1991, An amended complaint was filed impleading private respondent herein BENGUET LUMBER COMPANY, as represented by Tan Eng Lay. The amended complaint principally alleged that after the second World War, Tan Eng Kee and Tan Eng Lay, pooling their resources and industry together, entered into a partnership engaged in the business of selling lumber and hardware and construction supplies. They named their enterprise "Benguet Lumber" which they jointly managed until Tan Eng Kee's death. Petitioners herein averred that the business prospered due to the hard work and thrift of the alleged partners. However, they claimed that in 1981, 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. RTC- Benguet Lumber is a joint venture which is akin to a particular partnership CA- Reversed the RTCs decision

ISSUE: Whether Tan Eng Kee and Tan Eng Lay were partners in Benguet Lumber HELD: No partnership was established as the evidence presented was insufficient. Tan Eng Kee was merely an employee receiving wages. The partnership contract is required to be in writing the capital of which exceeds P3,000 and the findings of the lower courts reveals the absence of such contract. Co-ownership or co-possession is not an indictum of the existence of a partnership. A demand for a periodic accounting is evidence of a partnership which was not done by Tan Eng Kee during his lifetime being his right if ever he was a partner. The documents presented, not validly declared falsified by another court, further proves the non-existence of a partnership relation between the two brothers but an employer-employee relationship. Furthermore, petitioners did not offer or present evidence that their father received amounts pertaining to his share in the profits of the company. The allegations of petitioners merely show that their father was merely involved in the operations of Benguet Lumber but does not establish in what capacity. OBLIGATIONS OF PARTNERS AMONG THEMSELVES 1785: continuation of partnership beyond fixed term 1. ORTEGA V. CAthe lawfirm of bito, masa, lozada--there was a confusion as to whether the partnership was one with a particular undertaking or one with a fixed term. The defense by the other partner here was that it was a partnership with a specified undertaking (pertaining to duration) but the point raised here by the other partners was in accordance to the PURPOSE or extent of the subject matter of the partnership. Therefore, we have a partnership at will since wala namang fixed term or particular undertaking. What they have is a PARTICULAR PARTNERSHIP. The purpose there was in reference that it is a particular partnership. The partnership agreement (amended articles of 19 August 1948) does not provide for a specified period or undertaking. The "DURATION" clause simply states: "5. DURATION. The partnership shall continue so long as mutually satisfactory and upon the death or legal incapacity of one of the partners, shall be continued by the surviving partners." No period. No specific undertaking. However, may defense xa na it is for a fixed term that it was for a specific undertaking because of its purpose. But the classification that they used is different. Hindi yun ang ginarefer ng law. The birth and life of a partnership at will is predicated on the mutual desire and consent of the partners. The right to choose with whom a person wishes to associate himself is the very foundation and essence of that partnership. Its continued existence is, in turn, dependent on the constancy of that mutual resolve, along with each partner's capability to give it, and the absence of a cause for dissolution provided by the law itself. Verily, any one of the partners may, at his sole pleasure, dictate a dissolution of the partnership at will. He must, however, act in good faith, not that the attendance of bad faith can prevent the dissolution of the 4 5 partnership but that it can result in a liability for damages. In passing, neither would the presence of a period for its specific duration or the statement of a particular 6 purpose for its creation prevent the dissolution of any partnership by an act or will of a partner. Among 7 partners, mutual agency arises and the doctrine of delectus personae allows them to have the power, although not necessarily theright, to dissolve the partnership. An unjustified dissolution by the partner can subject him to a possible action for damages. 1788liability of a partner for his contribution to the partnership 1. UY V. PUZON there was an issue as to whether the advances made by Puzon from Uy were considered as a personal loan or contributions of Uy to the partnership. Remember the agreement was clear that they would contribute 100,000 with 50K each. There was already initial contribution made by Uy. C puzon, nashort. Kulang ang kanyang contribution. Here, it was clearly provided that the receipts will acknowledge that the money na hiniram ni puzon was to be considered as advance contribution of Uy to the partnership. Walang utang si William uy sa partnership. He cannot be considered a debtor. He made his contribution. Sino ang may liability? Si PUZON! Puzon was the one liable in this case Take note there was also a deed of assignment in this case but made without the knowledge of Uy. When he learned of such, the assignment to PNB is PREJUDICIAL TO PARTNERSHIP. Whatever gains puzon gained from the assignment should be applied to the partnership. Dapat sa partnership ang maktanggap nun but ginamit lang nya to satisfy his loans to the bank. Distinguish this case with Moran 2. MORAN V. CAarticle 1786 was emphasized here. The rule is, when a partner who has undertaken to contribute a sum of money fails to do so, he becomes a debtor of the partnership for whatever he may have promised to contribute (Art. 1786, Civil Code) and for interests and damages from the time he should have complied with his obligation (Art. 1788, Civil Code). Thus in Uy v. Puzon (79 SCRA 598), which interpreted Art. 2200 of the Civil Code of the Philippines, we allowed a total of P200,000.00 compensatory damages in favor of the appellee because the appellant therein was remiss in his obligations as a partner and as prime contractor of the construction projects in question. This case was decided on a particular set of facts. We awarded compensatory damages in the Uy case because there was a finding that the constructing business is a profitable one and that the UP construction company derived some profits from its contractors in the construction of roads and bridges despite its deficient capital." Besides, there was evidence to show that the partnership made some profits during the periods from July 2, 1956 to December 31, 1957 and from January

1, 1958 up to September 30, 1959. The profits on two government contracts worth P2,327,335.76 were not speculative. In the instant case, there is no evidence whatsoever that the partnership between the petitioner and the private respondent would have been a profitable venture. In fact, it was a failure doomed from the start. There is therefore no basis for the award of speculative damages in favor of the private respondent. Furthermore, in the Uy case, only Puzon failed to give his full contribution while Uy contributed much more than what was expected of him. In this case, however, there was mutual breach. Private respondent failed to give his entire contribution in the amount of P15,000.00. He contributed only P10,000.00. The petitioner likewise failed to give any of the amount expected of him. He further failed to comply with the agreement to print 95,000 copies of the posters. Instead, he printed only 2,000 copies. Being a contract of partnership, each partner must share in the profits and losses of the venture. That is the essence of a partnership. And even with an assurance made by one of the partners that they would earn a huge amount of profits, in the absence of fraud, the other partner cannot claim a right to recover the highly speculative profits. It is a rare business venture guaranteed to give 100% profits. In this case, on an investment of P15,000.00, the respondent was supposed to earn a guaranteed P1,000.00 a month for eight months and around P142,500.00 on 95,000 posters costing P2.00 each but 2,000 of which were sold at P5.00 each. The fantastic nature of expected profits is obvious. We have to take various factors into account. The failure of the Commission on Elections to proclaim all the 320 candidates of the Constitutional Convention on time was a major factor. The petitioner undesirable his best business judgment and felt that it would be a losing venture to go on with the printing of the agreed 95,000 copies of the posters. Hidden risks in any business venture have to be considered. With regard to issue of commission: Relative to the second alleged error, the petitioner submits that the award of P8,000.00 as Pecson's supposed commission has no justifiable basis in law. Again, we agree with the petitioner. The partnership agreement stipulated that the petitioner would give the private respondent a monthly commission of Pl,000.00 from April 15, 1971 to December 15, 1971 for a total of eight (8) monthly commissions. The agreement does not state the basis of the commission. The payment of the commission could only have been predicated on relatively extravagant profits. The parties could not have intended the giving of a commission inspite of loss or failure of the venture. Since the venture was a failure, the private respondent is not entitled to the P8,000.00 commission. 1789Obligations Of Industial Partner 1. EVANGELISTA V. ABAD SANTOSon the entitlement of Judge Abad Santos to receive profits from the law firm. We have an article of co-parntehsrip which expressly provide The amended Articles provided, inter alia, that "the contribution of Estrella Abad Santos consists of her industry being an industrial partner" nd that the profits and losses "shall be divided and distributed among the partners ... in the proportion of 70% for the first three partners, Domingo C. Evangelista, Jr., Conchita P. Navarro and Leonardo Atienza Abad Santos to be divided among them equally; and 30% for the fourth partner Estrella Abad Santos." Court ruled in favor of abad santos. Court applied the principle fo ESTOPPEL. Appellants are virtually estopped from attempting to detract from the probative force of the said exhibits because they all bear the imprint of their knowledge and consent, and there is no credible showing that they ever protested against or opposed their contents prior of the filing of their answer to appellee's complaint. It is not disputed that the provision against the industrial partner engaging in business for himself seeks to prevent any conflict of interest between the industrial partner and the partnership, and to insure faithful compliance by said partner with this prestation. There is no pretense, however, even on the part of the appellee is engaged in any business antagonistic to that of appellant company, since being a Judge of one of the branches of the City Court of Manila can hardly be characterized as a business. That appellee has faithfully complied with her prestation with respect to appellants is clearly shown by the fact that it was only after filing of the complaint in this case and the answer thereto appellants exercised their right of exclusion under the codal art just mentioned by alleging in their Supplemental Answer dated June 29, 1964 or after around nine (9) years from June 7, 1955 subsequent to the filing of defendants' answer to the complaint, defendants reached an agreement whereby the herein plaintiff been excluded from, and deprived of, her alleged share, interests or participation, as an alleged industrial partner, in the defendant partnership and/or in its net profits or income, on the ground plaintiff has never contributed her industry to the partnership, instead she has been and still is a judge of the City Court (formerly Municipal Court) of the City of Manila, devoting her time to performance of her duties as such judge and enjoying the privilege and emoluments appertaining to the said office, aside from teaching in law school in Manila, without the express consent of the herein defendants'. Having always known as a appellee as a City judge even before she joined appellant company on June 7, 1955 as an industrial partner, why did it take appellants many yearn before excluding her from said company as aforequoted allegations? appellee is an industrial partner of appellant company, with the right to demand for a formal accounting and to receive her share in the net profit that may result from such an accounting (Cite article 1899) 1796Responsibility Of The Partnership To The Partners 1. MARTINEZ V. ONG PONG CODemand on the return of what was contributed to the partnership. There were partners/investors in a store but the business suffered loss. HELD: there is a PARTNERSHIP evidenced by a private document. he whole action is based upon the fact that the defendants received certain capital from the plaintiff for the purpose of organizing a company; they, according to the agreement, were to handle the said money and invest it in a store which was the object of the association; they, in the

absence of a special agreement vesting in one sole person the management of the business, were the actual administrators thereof; as such administrators they were the agent of the company and incurred the liabilities peculiar to every agent, among which is that of rendering account to the principal of their transactions, and paying him everything they may have received by virtue of the mandatum. Neither of them has rendered such account nor proven the losses referred to by Ong Pong Co; they are therefore obliged to refund the money that they received for the purpose of establishing the said store the object of the association. This was the principal pronouncement of the judgment. t his court, like the court below, finds no evidence that the entire capital or any part thereof was lost. It is no evidence of such loss to aver, without proof, that the effects of the store were ejected. Even though this were proven, it could not be inferred therefrom that the ejectment was due to the fact that no rents were paid, and that the rent was not paid on account of the loss of the capital belonging to the enterprise. So even if nagclose ang store, you must still return. Kasi walang evidence man din. Inasmuch as in this case nothing appears other than the failure to fulfill an obligation on the part of a partner who acted as agent in receiving money for a given purpose, for which he has rendered no accounting, such agent is responsible only for the losses which, by a violation of the provisions of the law, he incurred. This being an obligation to pay in cash, there are no other losses than the legal interest, which interest is not due except from the time of the judicial demand, or, in the present case, from the filing of the complaint. (Arts. 1108 and 1100, Civil Code.) We do not consider that article 1688 is applicable in this case, in so far as it provides "that the partnership is liable to every partner for the amounts he may have disbursed on account of the same and for the proper interest," for the reason that no other money than that contributed as is involved. 1800Rights And Obligations With Respect To Management 1. FORTIS V. GUTIERREZ HERMANOSfortis was an employee who now claims for his salary which in the articles of the partnership that his compensation shall be 5% of the net profits of the business. was he a partner? NO. It is claimed by the appellants that the contract alleged in the complaint made the plaintiff a copartner of the defendants in the business which they were carrying on. This contention cannot be sustained. It was a mere contract of employment. The plaintiff had no voice nor vote in the management of the affairs of the company. The fact that the compensation received by him was to be determined with reference to the profits made by the defendants in their business did not in any sense make by a partner therein. The articles of partnership between the defendants provided that the profits should be divided among the partners named in a certain proportion. The contract made between the plaintiff and the then manager of the defendant partnership did not in any way vary or modify this provision of the articles of partnership. The profits of the business could not be determined until all of the expenses had been paid. A part of the expenses to be paid for the year 1902 was the salary of the plaintiff. That salary had to be deducted before the net profits of the business, which were to be divided among the partners, could be ascertained. It was undoubtedly necessary in order to determine what the salary of the plaintiff was, to determine what the profits of the business were, after paying all of the expenses except his, but that determination was not the final determination of the net profits of the business. It was made for the purpose of fixing the basis upon which his compensation should be determined. Who was the managing partner? Miguel Alonzo gutierrez. Why was it important to indicate he was a managing partner? By the provisions of the articles of partnership he was made one of the managers of the company, with full power to transact all of the business thereof. As such manager he had authority to make a contract of employment with the plaintiff. 1800--Scope Of Power Of Managing Partner 2. TAI TONG CHUACHE V. INSURANCE COMMISSIONpartnership is important to discuss in this case because here, they were questioning the personality of the partnership as against the personality of arsenio chua. Take note: arsenio was considered as MANAGING PARTNER. The premise is correct but the 10 conclusion is wrong. Citing Rule 3, Sec. 2 respondent pointed out that the action must be brought in the name of the real party in interest. We agree. However, it should be borne in mind that petitioner being a partnership may sue and be sued in its name or by its duly authorized representative. The fact that Arsenio Lopez Chua is the representative of petitioner is not questioned. Petitioner's declaration that Arsenio Lopez Chua acts as the managing partner of the partnership was corroborated by respondent insurance 11 company. Thus Chua as the managing partner of the partnership may execute all acts of 12 administration including the right to sue debtors of the partnership in case of their failure to pay their obligations when it became due and demandable. Or at the very least, Chua being a partner of petitioner Tai Tong Chuache & Company is an agent of the partnership. Being an agent, it is understood that he acted for 13 and in behalf of the firm. Public respondent's allegation that the civil case flied by Arsenio Chua was in his capacity as personal creditor of spouses Palomo has no basis. Lesson: if you are acting in behalf of the partnership, you must clearly allege that you do so in such capacity and not in your personal capacity. In this case, it was alleged that arsenio was a managing partner and it was clearly corroborated. On the other hand, if you are being sued in your personal capacity or because you are a managing partner..you have to take note of that. 1802rule when manner of management not agreed upon

1.

BACHRACH V. PROTECTORAmarcelo barba, acting as manager, contracted indebtedness for automobile supplies without express authority of the rest of the partners. He signed in this manner: by Marcelo barba, Marcelo barba (p.p. means he was acting as an agent, per procuration. HELD: The other two notes are signed in the same way with the word "By" omitted before the name of Marcelo Barba in the second line of the signature. It is obvious that in thus signing the notes Marcelo Barba intended to bind both the partnership and himself. There was NO AGREEMENT as to who is the manager in the partnership so ALL PARTNERS ARE CONSIDERED AGENTS OF THE PARTNERHSIP. There is no proof in the record showing what the agreement, if any, was made with regard to the form of management. Under these circumstances it is declared in article 1695 of the Civil Code that all the partners are considered agents of the partnership. Barba therefore must be held to have had authority to incur these expenses. But in addition to this he is shown to have been in fact the president or manager, and there can be no doubt that he had actual authority to incur this obligation. From what has been said it results that the appellants are severally liable for their respective shares of the entire indebtedness found to be due; However, it should be noted that any property pertaining to "La Protectora" should first be applied to this indebtedness pursuant to the judgment already entered in this case in the court below; and each of the four appellants shall be liable only for the one-fifth part of the remainder unpaid.

1804Contract Of Subpartnership 1. MACHUCA V. CHUIDIANassignments were made of the interest of the original partner in the partnership. rd If you trace the right of machuca, the assignment was considered a subpartnership where a 3 person was entitled to rights of the assignor. Although there was an issue on prohibition of the code of commerce prohibiting transfer of interest without consent of others, this did not affect assignment of interest. Meanwhile the assignor, Buenaventura, is to continue in the enjoyment of the rights and is to remain subject to the liabilities of a partner as though no assignment had been made. In other words, the assignment does not purport to transfer an interest in the partnership, but only a future contingent right to 25 per cent of such portion of the ultimate residue of the partnership property as the assignor may become entitled to receive by virtue of his proportionate interest in the capital. There is nothing in the case to show either that the nonpartner creditors of the partnership have been paid or that the claims of the Chuidian minors have been satisfied. Such rights as the plaintiff has acquired against the partnership under the assignment still remain, therefore, subject to the condition which attached to them in their origin, a condition wholly uncertain of realization, since it may be that the entire assets of the partnership will be exhausted in the payment of the creditors entitled to preference under the partnership agreement, thus extinguishing the plaintiffs right to receive anything from the liquidation . 1807partner accountable as FIDUCIARY 1. PANG LIM V. LO SENG(TRAHIDOR STORY) pang lim was a partner with lo seng when they leased the subject premises. It was a long term lease. However, subsequently, pang lim sold his interests to lo seng. Nevertheless, the contract of lease still continued. Pang lim then after acquired the property from owner of the property being leased. So pang lim and Galvez who bought the property demanded possession. he initiated an action to eject lo seng in the premises and asserted his right as a purchaser to possess the same. HELD: here, there was an application of the mortgage law, etc. the contract of lease was not rd annotated which will not in any way prejudice a 3 person. However, even if the lease was not annotated, pang lim was aware of the contract of lease. Even if he already purchased it from the owner, he is bound by it kasi at the time he purchased it, ALAM na nya! While yet a partner in the firm of Lo Seng and Co., Pang Lim participated in the creation of this lease, and when he sold out his interest in that firm to Lo Seng this operated as a transfer to Lo Seng of Pang Lim's interest in the firm assets, including the lease; and Pang Lim cannot now be permitted, in the guise of a purchaser of the estate, to destroy an interest derived from himself, and for which he has received full value. The bad faith of the plaintiffs in seeking to deprive the defendant of this lease is strikingly revealed in the circumstance that prior to the acquisition of this property Pang Lim had been partner with Lo Seng and Benito Galvez an employee. Both therefore had been in relations of confidence with Lo Seng and in that position had acquired knowledge of the possibilities of the property and possibly an experience which would have enabled them, in case they had acquired possession, to exploit the distillery with profit. On account of his status as partner in the firm of Lo Seng and Co., Pang Lim knew that the original lease had been extended for fifteen years; and he knew the extent of valuable improvements that had been made thereon. Certainly, as observed in the appellant's brief, it would be shocking to the moral sense if the condition of the law were found to be such that Pang Lim, after profiting by the sale of his interest in a business, worthless without the lease, could intervene as purchaser of the property and confiscate for his own benefit the property which he had sold for a valuable consideration to Lo Seng. The sense of justice recoils before the mere possibility of such eventuality. partners are required to exhibit towards each other the highest degree of good faith. In fact the relation between partners is essentially fiduciary, each being considered in law, as he is in fact, the confidential agent of the other. one partner cannot, to the detriment of another, apply exclusively to his own benefit the results of the knowledge and information gained in the character of partner. 2. LIM TANHU V. RAMOLETEexistence of the partnership has not been denied. We have the issue on the shares. If Po Chuan was in control of the affairs and the running of the partnership, how could the defendants have defrauded him of such huge amounts as plaintiff had made his Honor believe? Upon the

other hand, since Po Chuan was in control of the affairs of the partnership, the more logical inference is that if defendants had obtained any portion of the funds of the partnership for themselves, it must have been with the knowledge and consent of Po Chuan, for which reason no accounting could be demanded from them therefor, considering that Article 1807 of the Civil Code refers only to what is taken by a partner without the consent of the other partner or partners. Incidentally again, this theory about Po Chuan having been actively managing the partnership up to his death is a substantial deviation from the allegation in the amended complaint to the effect that "defendants Antonio Lim Tanhu, Alfonso Leonardo Ng Sua, Lim Teck Chuan and Eng Chong Leonardo, through fraud and machination, took actual and active management of the partnership and although Tee Hoon Lim Po Chuan was the manager of Glory Commercial Co., defendants managed to use the funds of the partnership to purchase lands and buildings etc. (Par. 4, p. 2 of amended complaint, Annex B of petition) and should not have been permitted to be proven by the hearing officer, who naturally did not know any better. 1809right to demand an accounting as long as partnership lasts. Prescription only begins to run upon dissolution when final accounting is done 1. FUE LEUNG V. IACfue leung was asking for an accounting of his interest in the partnership. Their business was a panciteria. There is an issue as to existence of partnership: the 4k given by fue leung was a sufficient proof that there was a parntehsrip. All the requisites were present. The private respondent is a partner of the petitioner in Sun Wah Panciteria. The requisites of a partnership which are 1) two or more persons bind themselves to contribute money, property, or industry to a common fund; and 2) intention on the part of the partners to divide the profits among themselves (Article 1767, Civil Code; Yulo v. Yang Chiao Cheng, 106 Phil. 110)-have been established. As stated by the respondent, a partner shares not only in profits but also in the losses of the firm. If excellent relations exist among the partners at the start of business and all the partners are more interested in seeing the firm grow rather than get immediate returns, a deferment of sharing in the profits is perfectly plausible. With regard to issue on right to accounting: It would be incorrect to state that if a partner does not assert his rights anytime within ten years from the start of operations, such rights are irretrievably lost. The private respondent's cause of action is premised upon the failure of the petitioner to give him the agreed profits in the operation of Sun Wah Panciteria. In effect the private respondent was asking for an accounting of his interests in the partnership. Regarding prescriptive period: Regarding the prescriptive period within which the private respondent may demand an accounting, Articles 1806, 1807, and 1809 show that the right to demand an accounting exists as long as the partnership exists. Prescription begins to run only upon the dissolution of the partnership when the final accounting is done. Considering the facts of this case, the Court may decree a dissolution of the partnership under Article 1831. There shall be a liquidation and winding up of partnership affairs, return of capital, and other incidents of dissolution because the continuation of the partnership has become inequitable. 2. EMNACE V. CAthe partnership was still in existence when he demanded for an accounting. This case relates to The three (3) final stages of a partnership are: (1) dissolution; (2) winding-up; and (3) [36] termination. The partnership, although dissolved, continues to exist and its legal personality is retained, at which time it completes the winding up of its affairs, including the partitioning and distribution of the net [37] partnership assets to the partners. For as long as the partnership exists, any of the partners may demand an accounting of the partnerships business. Prescription of the said right starts to run only upon the dissolution of the partnership when the final accounting is done. Contrary to petitioners protestations that respondents right to inquire into the business affairs of the partnership accrued in 1986, prescribing four (4) years thereafter, prescription had not even begun to run in the absence of a final accounting. Article 1842 of the Civil Code provides: The right to an account of his interest shall accrue to any partner, or his legal representative as against the winding up partners or the surviving partners or the person or partnership continuing the business, at the date of dissolution, in the absence of any agreement to the contrary. Applied in relation to Articles 1807 and 1809, which also deal with the duty to account, the above-cited provision states that the right to demand an accounting accrues at the date of dissolution in the absence of any agreement to the contrary. When a final accounting is made, it is only then that prescription begins to run. In the case at bar, no final accounting has been made, and that is precisely what respondents are seeking in their action before the trial court, since petitioner has failed or refused to render an accounting of the partnerships business and assets. Hence, the said action is not barred by prescription. 3. ORNUM V. LASALAparties here were assignees of the interests of the original partners. Ang mga parents nila ang capitalist partners. There was a document which was supposed to be considered as final settlement. After such shares had been paid by the petitioners and accepted by the respondents without any reservation, the approval of the statement of accounts was virtually confirmed and its signing thereby became a mere formality to be complied with by the respondents exclusively. Their refusal to sign, after receiving their shares, amounted to a waiver to that formality in favor of the petitioners who has already performed their obligation. that the petitioners were still frank enough to disclose that the original capital of P1,505.54 amounted, as of the date of the dissolution of the partnership, to P44,618.67; and that the respondents had received a total of P8,105.76 out of their capital of P1,000, without any effort on their part, we are reluctant even to make the

conjecture that the petitioners had ever intended to, or actually did, take undue advantage of the absence and confidence of the respondents. Indeed, we feel justified in stating that the petitioners have here given a remarkable demonstration of the legendary honesty, good faith and industry with which the natives of Taal pursue business arrangements similar to the partnership in question, and we would hate, in the absence of any sufficient reason, to let such a beautiful legend have a distateful ending. 4. SISON V. MCQUAID-- It is not clear from the allegations of the complaint just when plaintiffs cause of
action accrued. Consequently, it cannot be determined with certainty whether that action has already prescribed or not. Such being the case, the defense of prescription cannot be sustained on a mere motion to dismiss based on what appears on the face of the complaint. It does not allege that there has been

a liquidation of the partnership business and the said sum has been found to be due him as his share of the profits. The proceeds from the sale of a certain amount of lumber cannot be considered profits until costs and expenses have been deducted. Moreover, the profits of the business cannot be determined by taking into account the result of one particular transaction instead of all the transactions had. Hence, the need for a general liquidation before a member of a partnership may claim a specific sum as his share of the profits. B. PROPERTY RIGHTS OF THE PARTNERS 1811nature of a partners right in specific partnership property (4 incidences) 1. DELUAO V. CASTEELthis involves a fishpond. You can never have title or ownership over the fishpond. It is not considered as a specific partnership because only its use and enjoyment may be given but not ownership thereof. 2. NAVARRO V. ESCOBIDOkargo enterprises was not really based on a contract of partnership but the rule on partnership was applied. Under Article 108 of the Family Code, the conjugal partnership is governed by the rules on the contract of partnership in all that is not in conflict with what is expressly determined in this Chapter or by the spouses in their marriage settlements. In other words, the property relations of the husband and wife shall be governed primarily by Chapter 4 on Conjugal Partnership of Gains of the Family Code and, suppletorily, by the spouses marriage settlement and by the rules on partnership under the Civil Code. In the absence of any evidence of a marriage settlement between the spouses Go, we look at the Civil Code provision on partnership for guidance. A rule on partnership applicable to the spouses circumstances is Article 1811 of the Civil Code, which states: Art. 1811. A partner is a co-owner with the other partners of specific partnership property. The incidents of this co-ownership are such that: (1) A partner, subject to the provisions of this Title and to any agreement between the partners, has an equal right with his partners to possess specific partnership property for partnership purposes; xxx Under this provision, Glenn and Karen Go are effectively co-owners of Kargo Enterprises and the properties registered under this name; hence, both have an equal right to seek possession of these properties. Applying Article 484 of the Civil Code, which states that "in default of contracts, or special provisions, coownership shall be governed by the provisions of this Title," we find further support in Article 487 of the Civil Code that allows any of the co-owners to bring an action in ejectment with respect to the coowned property. In this connection, Article 1811 of the Civil Code provides that "[a] partner is a co-owner with the other partners of specific partnership property." Taken with the presumption of the conjugal nature of the funds used to finance the four checks used to pay for petitioners stock subscriptions, and with the presumption that the credits themselves are part of conjugal funds, Article 1811 makes Quirino and Milagros de Guzman co-owners of the alleged credit. 3. MENDIOLA V. CAMendional was an employee of Pacific Forest Philippines was terminated. In the agreement, it was provided that he will own a 50-50 equity of PacFor. HELD: NO PARTNERSHIP. We hold that petitioner is an employee of private respondent Pacfor and that no partnership or co-ownership exists between the parties. RULE: In a partnership, the members become co-owners of what is contributed to the firm capital and of all 36 property that may be acquired thereby and through the efforts of the members. The property or stock of the 37 partnership forms a community of goods, a common fund, in which each party has a proprietary interest. In 38 fact, the New Civil Code regards a partner as a co-owner of specific partnership property. Each partner possesses a joint interest in the whole of partnership property. If the relation does not have this feature, it is 39 not one of partnership. This essential element, the community of interest, or co-ownership of, or joint interest in partnership property is absent in the relations between petitioner and private respondent Pacfor. Petitioner is not a part-owner of Pacfor Phils. William Gleason, private respondent Pacfor's President established this fact when he said that Pacfor Phils. is simply a "theoretical company" for the purpose of dividing the income 50-50. He stressed that petitioner knew of this arrangement from the very start, having been the one to propose to private respondent Pacfor the setting up of a representative office, and "not a branch office" in the Philippines to save on taxes. Thus, the parties in this case, merely shared profits. This alone does not make a 40 partnership. Besides, a corporation cannot become a member of a partnership in the absence of express authorization 41 by statute or charter. This doctrine is based on the following considerations: (1) that the mutual agency between the partners, whereby the corporation would be bound by the acts of persons who are not its duly

appointed and authorized agents and officers, would be inconsistent with the policy of the law that the corporation shall manage its own affairs separately and exclusively; and, (2) that such an arrangement would improperly allow corporate property to become subject to risks not contemplated by the stockholders 42 when they originally invested in the corporation. No such authorization has been proved in the case at bar. 1811personality of partner to sue to recover partnership property 1. LOZANA V. DEPAKAKIBOboth partners in this case sold what they contributed to the partnership rd (engine) to 3 persons. Rule: partnership property cannot be disposed of without consent of other partners. The proceeds of the sale must belong to partnership. Can the other partner have the personality to questions such sale? HELD: yes. As properties of the partnership, the same could not be disposed of by the party contributing the same without the consent or approval of the partnership or of the other partner. It also follows that the claim of the defendant in his counterclaim that the partnership be dissolved and its assets liquidated is the proper remedy, not for each contributing partner to claim back what he had contributed. (it would have been different if meron ng liquidation and they will both agree that ibalik ang whatever ang gicontribute mo. Pwede yun) 1813Effect of assignment of partners whole interest in partnership 2. REALUBIT V. JASOwe have a PARTNERSHIP. It was considered as a joint venture. Nevertheless, it is considered a PARTICULAR PARTNERSHIP. 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 [27] [28] vocation. The rule is settled that joint ventures are governed by the law on partnerships which are, in [29] turn, based on mutual agency or delectus personae. Insofar as a partners conveyance of the entirety of his interest in the partnership is concerned, Article 1813 of the Civil Code provides as follows:xxx From the foregoing provision, it is evident that (t)he 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 partners 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 partners interest [ under Article 1831 of the Civil Code. 1815adoption of a firm name 1. IN RE SYCIPin this case, there was a distinction as to the allowance for accounting firms to use name fo deceased person but not in the case of practice of law. But with the enactment of the code of professional responsibility, it is now allowed for as long as it indicates in all its communications that the said partner is deceased. 2. JO CHUNG CANG V. PACIFICtech seing is general partnership but the firm name used was Tech Seing, Ltd. So it used limited in its firm name. a limited partnership must have 1 general partner and the rest are limited partners. With regard to use of limited in the firm name: With that premise, why was it held a general partnership and not limited? Because there is NO INDICATION THAT THERE IS A LIMITED PARTNER. IF THERE IS NO LIMITED PARTNER, THERE IS NO LIMITED PARTNERSHIP. Even if the firm name, there is a word limited. (To establish a limited partnership there must be, at least, one general partner and the name of the least one of the general partners must appear in the firm name. (Code of Commerce, arts. 122 [2], 146, 148.) But neither of these requirements have been fulfilled. The general rule is, that those who seek to avail themselves of the protection of laws permitting the creation of limited partnerships must show a substantially full compliance with such laws. A limited partnership that has not complied with the law of its creation is not considered a limited partnership at all, but a general partnership in which all the members are liable) With regard to firm name containing no name of the partner: even if so, it would not be a basis for such partner not to be held liable coz if you look at 1815, it may or may not include the name of 1 or more partner. With regard to rule on firm name, it is to PROTECT PUBLIC. (The one object of the act is manifestly to protect the public against imposition and fraud, prohibiting persons from concealing their identity by doing business under an assumed name, making it unlawful to use other than their real names in transacting business without a public record of who they are, available for use in courts, and to punish those who violate the prohibition). Partnership is liable even if the names fo the partners are not in the partnerhsips name. Take note: The object of this act is not limited to facilitating the collection of debts, or the protection of those giving credit to persons doing business under an assumed name. It is not unilateral in its application. It applies to debtor and creditor, contractor and contractee, alike. Parties doing business with those acting under an assumed name, whether they buy or sell, have a right, under the law, to know who they are, and

who to hold responsible, in case the question of damages for failure to perform or breach of warranty should arise. The legal intention deducible from the acts of the parties controls in determining the existence of a partnership. If they intend to do a thing which in law constitutes a partnership, they are partners, although their purpose was to avoid the creation of such relation. Here, the intention of the persons making up Teck Seing & co., Ltd. was to establish a partnership which they erroneously denominated a limited partnership. If this was their purpose, all subterfuges resorted to in order to evade liability for possible losses, while assuming their enjoyment of the advantages to be derived from the relation, must be disregarded. The partners who have disguised their identity under a designation distinct from that of any of the members of the firm should be penalized, and not the creditors who presumably have dealt with the partnership in good faith. This makes all the members of the general copartnership liable personally and in solidum with all their property for the results of the transactions made in the name and for the account of the partnership. Section 51 of the Insolvency Law, likewise, makes all the property of the partnership and also all the separate property of each of the partners liable. In other words, if a firm be insolvent, but one or more partners thereof are solvent, the creditors may proceed both against the firm and against the solvent partner or partners, first exhausting the assets of the firm before seizing the property of the partners. So partners cannot escape liability simply on the basis that their name does not appear in the partnership name. 3. PNB V. LO1 of the partners who was authorized by the managing partner contracted a loan with PNB in favor of the partnership secured by a personal property of the parnterhsip. The anomaly as to the organization is that instead of adopting a firm name of all or any of the partners, they just used tai sing an company as firm name. there were 2 cases here which were considered as existing in fact though not in law due to the fact that they were not registered. Nevertheless, SC considered them as liable. Much more in this case where we refer to a partnership that is REGISTERED in the mercantile registry. With regard to use of firm namewill partners be still held liable? YES. It is for the protection of creditors rather than the partners themselves. And the Supreme Court so held in the case of Jo Chung Cang vs. Pacific Commercial Co., (45 Phil., 142), in which it said that the object of article 126 of the Code of Commerce in requiring a general partnership to transact business under the name of all its members, of several of them, or of one only, is to protect the public from imposition and fraud; and that the provision of said article 126 is for the protection of the creditors rather than of the partners themselves. And consequently the doctrine was enunciated that the law must be unlawful and unenforceable only as between the partners and at the instance of the violating party, but not in the sense of depriving innocent parties of their rights who may have dealt with the offenders in ignorance of the latter having violated the law; and that contracts entered into by commercial associations defectively organized are valid when voluntarily executed by the parties, and the only question is whether or not they complied with the agreement. Therefore, the defendants cannot invoke in their defense the anomaly in the firm name which they themselves adopted The court found that the partnership property described in the mortgage Exhibit F no loner existed at the time of the filing of the herein complaint nor has its existence been proven, nor was it offered to the plaintiff for sale. Disposition: all the members of a general partnership, be they managing partners thereof or not, shall be personally and solidarily liable with all their property, for the results of the transactions made in the name and for the account of the partnership, under the signature of the latter, and by a person authorized to use it. 1816liability for CONTRACTUAL OBLIGATIONS of th partnership 1. ISLAND SALES V. UNITED PIONEERSThis refers to a case where 1 of the defendants was dismissed from the case. but such will not increase the liability of the rest of the partners. This made mention also of the case of Co Pitco V. Yulo which upheld the principle of pro-rata liability. The other partner there left the country but it cannot increase the liability of the partner.

1824liability of partners for everything chargeable to partnership 1. MUNASQUE V. CAwe have a Solidary obligation of the partners for the LIABILITY of one partner as rd against their creditor. One partner malversed the money of the 3 person. Even if it was the other partner who was liable for the wrongful act or omission, he cannot invoke the bad faith of the other partner if it is the rd 3 person who claims relief for his copartners liability. Respondent Tropical therefore, had every right to presume that the petitioner and Galan were true partners. If they were not partners as petitioner claims, then he has only himself to blame for making the relationship appear otherwise, not only to Tropical but to their other creditors as well. The payments made to the partnership were, therefore, valid payments. that the payment made by Tropical to Galan was a good payment which binds both Galan and the petitioner. Since the two were partners when the debts were incurred, they, are also both liable to third persons who extended credit to their partnership. There is a general presumption that each individual partner is an authorized agent for the firm and that he has authority to bind the firm in carrying on the partnership transactions. (Mills vs. Riggle,112 Pan, 617). The presumption is sufficient to permit third persons to hold the firm liable on transactions entered into by one of members of the firm acting apparently in its behalf and within the scope of his authority

We, however, take exception to the ruling of the appellate court that the trial court's ordering petitioner and Galan to pay the credits of Blue Diamond and Cebu Southern Hardware"jointly and severally" is plain error since the liability of partners under the law to third persons for contracts executed inconnection with partnership business is only pro rata under Art. 1816, of the Civil Code. While it is true that under Article 1816 of the Civil Code,"All partners, including industrial ones, shall be liable prorate with all their property and after all the partnership assets have been exhausted, for the contracts which may be entered into the name and fm the account cd the partnership, under its signature and by a person authorized to act for the partner-ship. ...". this provision should be construed together with Article 1824 which provides that: "All partners are liable solidarily with the partnership for everything chargeable to the partnership under Articles 1822 and 1823." In short, while the liability of the partners are merely joint in transactions entered into by the partnership, a third person who transacted with said partnership can hold the partners solidarily liable for the whole obligation if the case of the third person falls under Articles 1822 or 1823. The obligation is solidary, because the law protects him, who in good faith relied upon the authority of a partner, whether such authority is real or apparent. That is why under Article 1824 of the Civil Code all partners, whether innocent or guilty, as well as the legal entity which is the partnership, are solidarily liable. In the case at bar the respondent Tropical had every reason to believe that a partnership existed between the petitioner and Galan and no fault or error can be imputed against it for making payments to "Galan and Associates" and delivering the same to Galan because as far as it was concerned, Galan was a true partner with real authority to transact on behalf of the partnership with which it was dealing. This is even more true in the cases of Cebu Southern Hardware and Blue Diamond Glass Palace who supplied materials on credit to the partnership. Thus, it is but fair that the consequences of any wrongful act committed by any of the partners therein should be answered solidarily by all the partners and the partnership as a whole However. as between the partners Muasque and Galan,justice also dictates that Muasque be reimbursed by Galan for the payments made by the former representing the liability of their partnership to herein intervenors, as it was satisfactorily established that Galan acted in bad faith in his dealings with Muasque as a partner. 2. TIOSEJO V. SPOUSES ANG-- By the express terms of the JVA, it appears that petitioner not only retained [53] ownership of the property pending completion of the condominium project but had also bound itself to answer liabilities proceeding from contracts entered into by PPGI with third parties. Viewed in the light of the foregoing provision of the JVA, petitioner cannot avoid liability by claiming that it was not in any way privy to the Contracts to Sell executed by PPGI and respondents. As correctly argued by the latter, moreover, a joint venture is considered in this jurisdiction as a form of partnership and is, accordingly, governed by the [54] law of partnerships. Under Article 1824 of the Civil Code of the Philippines, all partners are solidarily liable with the partnership for everything chargeable to the partnership, including loss or injury caused to a third person or penalties incurred due to any wrongful act or omission of any partner acting in the ordinary [55] course of the business of the partnership or with the authority of his co-partners. Whether innocent or guilty, all the partners are solidarily liable with the partnership itself.