PARTNERSHIP and AGENCYJarantilla, for the accounting of the assets and income of the co-ownership, for its partition

and the delivery of her share corresponding to eight percent (8%), and for damages. Antonieta claimed that in 1 !", she had entered into an agreement with the defendants to engage in #usiness through the e$ecution of a document denominated as %Ac&nowledgement of 'articipating (apital). Antonieta also alleged that she had helped in the management of the #usiness they co-owned without receiving any salary. Antonieta further claimed co-ownership of certain properties (the su#*ect real properties) in the name of the defendants since the only way the defendants could have purchased these properties were through the partnership as they had no other source of income. +he respondents did not deny the e$istence and validity of the %Ac&nowledgement of 'articipating (apital% and in fact used this as evidence to support their claim that Antonieta,s 8% share was limited to the #usinesses enumerated therein. +he respondents denied using the partnership,s income to purchase the su#*ect real properties. -uring the course of the trial at the .+(, petitioner /ederico Jarantilla, Jr., who was one of the original defendants, entered into a compromise agreement 10 with Antonieta Jarantilla wherein he supported Antonieta,s claims and asserted that he too was entitled to si$ percent ("%) of the supposed partnership in the same manner as Antonieta was. 122345 6hether or not the partnership su#*ect of the Ac&nowledgement of 'articipating (apital funded the su#*ect real properties. 748-5 3nder Article 10"0 of the (ivil (ode, there are two essential elements in a contract of partnership5 (a) an agreement to contri#ute money, property or industry to a common fund9 and (#) intent to divide the profits among the contracting parties. +he first element is undou#tedly present in the case at #ar, for, admittedly, all the parties in this case have agreed to, and did, contri#ute money and property to a common fund. 7ence, the issue narrows down to their intent in acting as they did. 1t is not denied that all the parties in this case have agreed to contri#ute capital to a common fund to #e a#le to later on share its profits. +hey have admitted this fact, agreed to its veracity, and even su#mitted one documentary evidence to prove such partnership - the Ac&nowledgement of 'articipating (apital. +he petitioner himself claims his share to #e "%, as stated in the Ac&nowledgement of 'articipating (apital. 7owever, petitioner fails to reali:e that this document specifically enumerated the #usinesses covered #y the partnership5 ;anila Athletic 2upply, .emotigue +rading in 1loilo (ity and .emotigue +rading in (ota#ato (ity. 2ince there was a clear agreement that the capital the partners contri#uted went to the three #usinesses, then there is no reason to deviate from such agreement and go #eyond the stipulations in the document. +here is no evidence that the su#*ect real properties were assets of the partnership referred to in the Ac&nowledgement of 'articipating (apital. 'etition denied.

<... =o. 10>" ? ;arch @, >?1? 741.2 A/ JA24 81;, represented #y 484=1+A 81;, 'etitioners, vs. J3814+ B188A 81;, .espondent. -4(121A= =A(73.A, J.5 /acts5 'etitioners are the heirs of the late Jose 8im (Jose). +hey filed a (omplaint for 'artition, Accounting and -amages against respondent Juliet Billa 8im (respondent), widow of the late 4lfledo 8im (4lfledo), who was the eldest son of Jose and (resencia. Jose, together with his friends, formed a partnership to engage in the truc&ing #usiness. Jose managed the operations of this truc&ing #usiness until his death. +hereafter, JoseCs heirs, including 4lfledo, and partners agreed to continue the #usiness under the management of 4lfledo. 'etitioners also alleged that 4lfledo was never a partner or an investor in the #usiness and merely supervised the purchase of additional truc&s using the income from the truc&ing #usiness of the partners. 4lfledo died, leaving respondent as his sole surviving heir. 'etitioners claimed that respondent too& over the administration of the aforementioned properties, which #elonged to the estate of Jose, without their consent and approval. .espondent claimed that 4lfledo was himself a partner of =or#erto and Jimmy. .espondent also claimed that per testimony of (resencia, Jose gave 4lfledo 'D?,???.?? as the latterCs capital in an informal partnership with Jimmy and =or#erto. .espondent also alleged that when Jose died, he left no &nown assets, and the partnership with Jimmy and =or#erto ceased upon his demise. 1n essence, petitioners argue that according to the testimony of Jimmy, the sole surviving partner, 4lfledo was not a partner9 and that he and =or#erto entered into a partnership with Jose.

1ssue5 6as there a partnershipE 7eld5 6e find that the instant 'etition is #ereft of merit. A partnership e$ists when two or more persons agree to place their money, effects, la#or, and s&ill in lawful commerce or #usiness, with the understanding that there shall #e a proportionate sharing of the profits and losses among them. A contract of partnership is defined #y the (ivil (ode as one where two or more persons #ind themselves to contri#ute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. 3ndou#tedly, the #est evidence would have #een the contract of partnership or the articles of partnership. 3nfortunately, there is none in this case, #ecause the alleged partnership was never formally organi:ed. =onetheless, we are as&ed to determine who #etween Jose and 4lfledo was the %partner% in the truc&ing #usiness. 4lfledo was not *ust a hired help #ut one of the partners in the truc&ing #usiness, active and visi#le in the running of its affairs from day one until this ceased operations upon his demise. +he e$tent of his control, administration and management of the partnership and its #usiness, the fact that its properties were placed in his name, and that he was not paid salary or other compensation #y the partners, are indicative of the fact that 4lfledo was a partner and a controlling one at that. 1t is apparent that the other partners only contri#uted in the initial capital #ut had no say thereafter on how the #usiness was ran. 4vidently it was through 4lfredo,s efforts and hard wor& that the partnership was a#le to acFuire more truc&s and otherwise prosper. 4ven the appellant participated in the affairs of the partnership #y acting as the #oo&&eeper sans salary.1avvphi1 1t is nota#le too that Jose 8im died when the partnership was #arely a year old, and the partnership and its #usiness not only continued #ut also flourished. 1f it were true that it was Jose 8im and not 4lfledo who was the partner, then upon his death the partnership should have #een dissolved and its assets liFuidated. An the contrary, these were not done #ut instead its operation continued under the helm of 4lfledo and without any participation from the heirs of Jose 8im.

Philex Mining Corp v CIR Baldr /acts5 'etitioner 'hile$ entered into an agreement with Gaguio <old ;ining (orporation for the former to manage the latter,s mining claim &now as the 2to. ;ine. +he parties, agreement was denominated as H'ower of Attorney). +he mine suffered continuing

losses over the years, which resulted in petitioners, withdrawal as manager of the mine. +he parties e$ecuted a H(ompromise -ation in 'ayment), wherein the de#t of Gaguio amounted to 'hp. 11>,1@",???.??. 'etitioner deducted said amount from its gross income in its annual ta$ income return as Hloss on the settlement of receiva#les from Gaguio <old against reserves and allowances). G1. disallowed the amount as deduction for #ad de#t. 'etitioner claims that it entered a contract of agency evidenced #y the Hpower of attorney) e$ecuted #y them and the advances made #y petitioners is in the nature of a loan and thus can #e deducted from its gross income. (ourt of +a$ Appeals ((+A) re*ected the claim and held that it is a partnership rather than an agency. (A affirmed (+A 1ssue5 6hether or not it is an agency. 7eld5 =o. +he lower courts correctly held that the H'ower of Attorney) ('A) is the instrument material that is material in determining the true nature of the #usiness relationship #etween petitioner and Gaguio. An e$amination of the said 'A reveals that a partnership or *oint venture was indeed intended #y the parties. 6hile a corporation li&e the petitioner cannot generally enter into a contract of partnership unless authori:ed #y law or its charter, it has #een held that it may enter into a *oint venture, which is a&in to a particular partnership. +he 'A indicates that the parties had intended to create a 'A+ and esta#lish a common fund for the purpose. +hey also had a *oint interest in the profits of the #usiness as shown #y the D?-D? sharing of income of the mine. ;oreover, in an agency coupled with interest, it is the agency that cannot #e revo&ed or withdrawn #y the principal due to an interest of a third party that depends upon it or the mutual interest of #oth principal and agent. 1n this case the non-revocation or nonwithdrawal under the 'A applies to the advances made #y the petitioner who is the agent and not the principal under the contract. +hus, it cannot #e inferred from the stipulation that it is an agency. Santos v Spo ses Re!es Pat 1n June 1 8", /ernando 2antos (0?%), =ieves .eyes (1D%), and ;elton Ia#at (1D%) orally instituted a partnership with them as partners. +heir venture is to set up a lending #usiness where it was agreed that 2antos shall #e financier and that =ieves and Ia#at shall contri#ute their industry. **The percentages after their names denote their share in the profit. 8ater, =ieves introduced (esar <ragera to 2antos. <ragera was the chairman of a corporation. 1t was agreed that the partnership shall provide loans to the employees of <ragera,s corporation and <ragera shall earn commission from loan payments. 1n August 1 8", the three partners put into writing their ver#al agreement to form the partnership. As earlier agreed, 2antos shall finance and =ieves shall do the daily cash flow more particularly from their dealings with <ragera, Ia#at on the other hand shall #e a loan investigator. Gut then later, =ieves and 2antos found out that Ia#at was engaged

in another lending #usiness which competes with their partnership hence Ia#at was e$pelled. +he two continued with the partnership and they too& with them =ieves, hus#and, Arsenio, who #ecame their loan investigator. 8ater, 2antos accused the spouses of not remitting <ragera,s commissions to the latter. 7e sued them for collection of sum of money. +he spouses countered that 2antos merely filed the complaint #ecause he did not want the spouses to get their shares in the profits. 2antos argued that the spouses, insofar as the dealing with <ragera is concerned, are merely his employees. 2antos alleged that there is a distinct partnership #etween him and <ragera which is separate from the partnership formed #etween him, Ia#at and =ieves. +he trial court as well as the (ourt of Appeals ruled against 2antos and ordered the latter to pay the shares of the spouses. 122345 6hether or not the spouses are partners. 748-5 Jes. +hough it is true that the original partnership #etween Ia#at, 2antos and =ieves was terminated when Ia#at was e$pelled, the said partnership was however considered continued when =ieves and 2antos continued engaging as usual in the lending #usiness even getting =ieves, hus#and, who resigned from the Asian -evelopment Gan&, to #e their loan investigator K who, in effect, su#stituted Ia#at. +here is no separate partnership #etween 2antos and <ragera. +he latter #eing merely a commission agent of the partnership. +his is even though the partnership was formali:ed shortly after <ragera met with 2antos (=ote that =ieves was even the one who introduced <ragera to 2antos e$actly for the purpose of setting up a lending agreement #etween the corporation and the partnership). 7A64B4., the order of the (ourt of Appeals directing 2antos to give the spouses their shares in the profit is premature. +he accounting made #y the trial court is #ased on the Htotal income) of the partnership. 2uch total income calculated #y the trial court did not consider the e$penses sustained #y the partnership. All e$penses incurred #y the money-lending enterprise of the parties must first #e deducted from the Htotal income) in order to arrive at the Hnet profit) of the partnership. +he share of each one of them should #e #ased on this Hnet profit) and not from the Hgross income) or Htotal income). To"ao v CA#$en (%"to&er '( )***) +%CTRINE, 1t may #e constituted in any form9 a pu#licinstrument is necessary only where immova#le property or real rights are contri#uted thereto. +his implies that since a contract of partnership is consensual, an oral contract of partnership is as good as a written one. 6here no immova#le property or real rights areinvolved, what matters is that the parties have complied with the reFuisites of a partnership.

NAT-RE, 'etition for review on certiorari P%NENTE, YNARES#.SANTIAG%, J. /ACTS, 'etitioner 6illiam Gelo introduced respondent =enitaAnay to petitioner ;ar*orie +ocao, who conveyed her desire to enter into a *ointventure with her for the importation and local distri#ution of &itchen coo&wares. 3nder the *oint venture, Gelo acted as capitalist, +ocao aspresident and general manager, and Anay as head of the mar&eting department and later, vice-Lpresident for sales. +he parties agreed to useAnayCs name in securing distri#utorship of coo&ware from 6est Gend (ompany, a manufacturer of &itchen coo&wares in 6isconsin, 3.2.A. +heparties agreed further that Anay would #e entitled to5 (1) ten percent (1?%) of the annual net profits of the #usiness9 (>) overridingcommission of si$ percent ("%) of the overall wee&ly production9 (@) thirty percent (@?%) of the sales she would ma&e9 and (!) two percent(>%) for her demonstration services. +he agreement was not reduced to writing on the strength of GeloCs assurances that he was sincere,dependa#le and honest when it came to financial commitments. Anay having secured the distri#utorship of coo&ware products from the 6estGend (ompany and organi:ed the administrative staff and the sales force, the coo&ware #usiness too& off successfully. +hey operated underthe name of <eminesse 4nterprise, a sole proprietorship registered in ;ar*orie +ocaoCs name, with office at 01> .ufino Guilding, Ayala Avenue,;a&ati (ity. Gelo made good his monetary commitments to Anay. An Acto#er , 1 80, Anay learned that ;ar*orie +ocao had signed a letteraddressed to the (u#ao sales office to the effect that she was no longer the vice- L president of <eminesse4nterprise. +he following day,Acto#er 1?, she received a note from 8ina +. (ru:, mar&eting manager, that ;ar*orie +ocao had #arred her from holding office and conductingdemonstrations in #oth ;a&ati and (u#ao offices. Anay attempted to contact Gelo. 2he wrote him twice to demand her overriding commissionfor the period of January 8, 1 88 to /e#ruary D, 1 88 and the audit of the company to determine her share in the net profits. 6hen her letterswere not answered, Anay consulted her lawyer, who, in turn, wrote Gelo a letter. 2till, that letter was not answered. Anay still received her fivepercent (D%) overriding commission up to -ecem#er 1 80. +he following year, 1 88, she did not receive the same commission although thecompany netted a gross sales of '1@,@??,@"?.??. An April D, 1 88, =enita A. Anay filed (ivil (ase =o. 88-LD? , a complaint for sum of moneywith damagesagainst ;ar*orie -. +ocao and 6illiam Gelo #efore the .egional +rial (ourt of ;a&ati, Granch 1!?. +he trial court held that therewas indeed an oral partnership agreement #etween the plaintiff and the defendants, #ased on the following5 (a) there was an intention tocreate a partnership9 (#) a common fund was esta#lished through contri#utions consisting of money and industry, and (c) there was a *ointinterest in the profits. 'etitioners appeal to the (ourt of Appealswas dismissed. +heir ;otion for .econsideration was denied #y the (ourt of Appeals for lac& of merit.

ISS-ES,6hether or not a partnership e$ists HE0+ 1RATI%2R-0ING, Jes. +he issue of whether or not a partnership e$ists is a factual matter which is within the e$clusive domain of #oth the trial andappellate courts. +his (ourt cannot set aside factual findings of such courts a#sent any showing that there is no evidence to support theconclusion drawn #y the courta Fuo. 1n this case, #oth the trial court and the (ourt of Appeals are one in ruling that petitioners and privaterespondent esta#lished a #usiness partnership. +his (ourt finds no reason to rule otherwise. +o #e considered a *uridical personality, apartnership must fulfill these reFuisites5 (1) two or more persons #ind themselves to contri#ute money, property or industry to a commonfund9 and (>) intention on the part of the partners to divide the profits among themselves. 1t may #e constituted in any form9 a pu#licinstrument is necessary only where immova#le property or real rights are contri#uted thereto. +his implies that since a contract of partnership is consensual, an oral contract of partnership is as good as a written one. 6here no immova#le property or real rights areinvolved, what matters is that the parties have complied with the reFuisites of a partnership. +he fact that there appears to #e no record in the2ecurities and 4$change (ommission of a pu#lic instrument em#odying the partnership agreement pursuant to Article 100> of the (ivil (ode did not cause the nullification of the partnership. +he pertinent provision of the (ivil (ode on the matter states5Art. 10"8. +he partnership has a *uridical personality separate and distinct from that of each of the partners, even in case of failure to complywith the reFuirements of article 100>, first paragraph. +ISP%SITI%N, 3HERE/%RE, the instant petition for review on certiorari is -4=14-. +he partnership among petitioners and private respondent is ordered dissolved, and the parties are ordered to effect the winding up and liFuidation of the partnership pursuant to the pertinent provisions of the (ivil (ode. +his case is remanded to the .egional +rial (ourt for proper proceedings relative to said dissolution. +he appealed decisions of the .egional +rial (ourt and the (ourt of Appeals are A//1.;4with ;A-1/1(A+1A=2, as follows -L-L-L 1. 'etitioners are ordered to su#mit to the .egional +rial (ourt a formal account of the partnership affairs for the years 1 80 and 1 88, pursuant to Article 18? of the (ivil (ode, in order to determine private respondent,s ten percent (1?%) share in the net profits of the partnership9

>. 'etitioners are ordered, *ointly and severally, to pay private respondent five percent (D%) overriding commission for the one hundred and fifty (1D?) coo&ware sets availa#le for disposition since the time private respondent was wrongfully e$cluded from the partnership #y petitioners9 @. 'etitioners are ordered, *ointly and severally, to pay private respondent overriding commission on the total production which, for the period covering January 8, 1 88 to /e#ruary D, 1 88, amounted to '@>,???.??9 !. 'etitioners are ordered, *ointly and severally, to pay private respondent moral damages in the amount of 'D?,???.??, e$emplary damages in the amount of 'D?,???.?? and attorney,s fees in the amount of '>D,???.??. 4%TE, 1st division. Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur.

A/ISC% Ins ran"e Corporation v5 CA # Mi6e 'ursuant to Hreinsurance treaties,) a num#er of local insurance firms formed themselves into aHpool) in order to facilitate the handling of #usiness contracted with a non resident foreignreinsurance company. After assessing their su#mitted financial statement, the G1. (ommissioner reFuired them to pay deficiency ta$es on the ground that they have formed an unregistered partnership ta$a#le as a corporation MMMA/12(A5 there was no partnership N +he reinsurance policies were written #y them individually and separately N +heir lia#ility was limited to the e$tent of their allocated share in the original ris&s thusreinsured N +hey did not share the same ris& or solidary lia#ility N +here was no common fund N +he e$ecutive #oard of the pool did not e$ercise control and management of its funds,unli&e the #oard of directors of a corporation N +he pool or clearing house was not and could not possi#ly have engaged in the #usinessof reinsurance from which it could have derived income for itself MMM(A5 a partnership was formed Iss e, 6A= the pool or clearing house was a partnership or association su#*ect to ta$ as a corporation

Held, Jes, it is. +he 'hilippine legislature included in the concept of corporations those entities that resem#led them such as unregistered partnerships and associations. N 'arenthetically, the =8.(,s inclusion of such entities in the ta$ on corporations was made even clearer #y the +a$ .eform Act of 1 0, which amended the +a$ (ode 2(5 the term partnership includes syndicate, group, pool, *oint venture and otherunincorporated organi:ation, through or #y means of which any #usiness, financial operation, orventure is carried on (4vangelista v. (ollector of 1nternal .evenue) Art. 10"0 of the (ivil (ode5 reFuisite of a contract of partnership +wo or more persons mutually contri#ute to a common fund 6ith the intention to divide the profits among themselves E4ANGE0ISTA v CIR 789: # Mi6e 'etitioners #orrowed sum of money from their father and together with their own personal funds they used said money to #uy several real properties. +hey then appointed their #rother (2imeon) as manager of the said real properties with powers and authority to sell, lease or rent out said properties to third persons. +hey reali:ed rental income from the said properties for the period 1 !D-1 ! .An 2eptem#er >!, 1 D! respondent (ollector of 1nternal .evenue demanded the payment of income ta$ on corporations, real estate dealerCs fi$ed ta$ and corporation residence ta$ for the years 1 !D-1 ! . +he letter of demand and corresponding assessments were delivered to petitioners on -ecem#er @, 1 D!, whereupon they instituted the present case in the (ourt of +a$ Appeals, with a prayer that %the decision of the respondent contained in his letter of demand dated 2eptem#er >!, 1 D!% #e reversed, and that they #e a#solved from the payment of the ta$es in Fuestion. (+A denied their petition and su#seFuent ;. and =ew +rials were denied. 7ence this petition. Iss e, 6M= petitioners have formed a partnership and conseFuently, are su#*ect to the ta$ on corporations provided for in the =1.(, as well as to the residence ta$ for corporations and the real estate dealers fi$ed ta$. Held, YES5 +he essential elements of a partnership are two, namely5 (a) an agree;ent to "ontri& te ;one!(propert! or ind str! to a "o;;on < nd 9 and (#) intent to divide the pro<its a;ong the "ontra"tingparties . +he first element is undou#tedly present in the case at #ar, for, admittedly, petitioners have agreed to,and did, contri#ute money and property to a common fund. 3pon consideration of all the facts andcircumstances surrounding the case, we are fully satisfied that their purpose was to engage in real estatetransactions for monetary gain and then divide the same among themselves, #ecause of the followingo#servations, among others5 (1) 2aid common fund was not something they found already in e$istence9 (>)+hey invested the same, not merely in one transaction, #ut in a series of

transactions9 (@) +he aforesaid lotswere not devoted to residential purposes, or to other personal uses, of petitioners herein.Although, ta&en singly, they might not suffice to esta#lish the intent necessary to constitute a partnership, thecollective effect of these circumstances is such as to leave no room for dou#t on the e$istence of said intent inpetitioners herein./or purposes of the ta$ on corporations, our =ational 1nternal .evenue (ode, includes these partnerships O with the e$ception only of duly registered general copartnerships O within the purview of the term%corporation.% 1t is, therefore, clear to our mind that petitioners herein constitute a partnership, insofar as said(ode is concerned and are su#*ect to the income ta$ for corporations. Y-0% 45 YANG CHIA% SENG # Mi6e Jang (hiao 2eng proposed to form a partnership with .osario Julo to run and operate a theatre on the premises occupied #y (ine Aro, 'la:a 2ta. (ru:, ;anila, wM the ff principal conditions5 (1) Jang guarantees Julo a monthly participation of '@,??? (>) partnership shall #e for a period of > years and " months with the condition that if the land is e$propriated, rendered impractica#le for #usiness, owner constructs a permanent #uilding, then Julo,s right to lease and partnership even if period agreed upon has not yet e$pired9 (@) Julo is authori:ed to personally conduct #usiness in the lo##y of the #uilding9 and (!) after -ec @1, 1 !0, all improvements placed #y partnership shall #elong to Julo #ut if partnership is terminated #efore lapse of 1 and P years, Jang shall have right to remove improvements. 'arties esta#lished, HJang and (o. 8td.), to e$ist from July 1, 1 !D K -ec @1, 1 !0. 1n June 1 !", they e$ecuted a suplemntry agreement e$tending the partnership for @ years Q from 1M1M1 !8 to 1>M@1M1 D1 +he land on which the theater was constructed was leased #y Julo from owners, 4milia (arrion and ;aria (arrion 2anta ;arina for an indefinite period #ut that after 1 year, such lease may #e cancelled #y either party upon ?-day notice. 1n Apr 1 ! , the owners notified Julo of their desire to cancel the lease contract come July. Julo and hus#and #rought a civil action to declare the lease for a indefinite period. Awners #rought their own civil action for e*ectment upon Julo and Jang. C/I5 +wo cases were heard *ointly9 (omplaint of Julo and Jang dismissed declaring contract of lease terminated. CA5 Affirmed 1n 1 D?, Julo demanded from Jang her share in the profits of the #usiness. Jang answered saying he had to suspend payment #ecause of pending e*ectment suit. Julo filed action in 1 D!, alleging the e$istence of a partnership #etween them and that Jang has refused to pay her shares. +e<endant=s Position5 8ease not partnership9 partnership was adopted as a su#terfuge to get around the prohi#ition contained in the contract of lease #etween the owners and the plaintiff against the su#lease of the property. TC5 -ismissal. =o partnership was created #Mw them #ecause defendant has not actually contri#uted the sum mentioned in the Articles of 'artnership or any other

amount. +he agreement is a lease #ecause plaintiff didn,t share either in the profits or in the losses of the #usiness as reFuired #y Art 10" ((() and #ecause plaintiff was granted a Hguaranteed participation) in the profits #elies the supposed e$istence of a partnership. 1ssue5 6as the agreement a contract a lease or a partnershipE 748-5 -ismissal. +he agreement was a su#lease not a partnership. +he following are the re> isites o< partnership, ?7@ two or more persons who &ind the;selves to "ontri& te ;one!, propert! or ind str! to a "o;;on < nd9 ?)@ the intention Q divide the pro<its among themselves (Art10"1) 'laintiff did not furnish the supposed '>?,??? capital nor did she anything in the management of the theatre. =either has she demanded from defendant any accounting of the e$penses and earnings of the #usiness. 2he was a#solutely silent with respect to any of the acts that a partner should have done9 all she did was to receive her share of '@,??? a month which cannot #e interpreted in any manner than a payment for the use of premises which she had leased from the owners. Mendiola v CA Civ $M T ason v Bolanos Bian"a G5R5 No5 0#'8A9 Ma! )B( 789' $5 M5 T-AS%N 1 C%5( INC5( represented &! it Managing PARTNER( GREG%RIA ARANETA( INC5( plainti<<#appellee( vs5 C-IRIN% B%0AD%S( de<endant#appellant5 /a"ts, 'laintiffCs filed a complaint against the defendant for recovery land. -efendant, in his answer, sets up prescription and title in himself thru %open, continuous, e$clusive and pu#lic and notorious possession (of land in dispute) under claim of ownership, adverse to the entire world #y defendant and his predecessor in interest% from %time inmemorial%. -efendant also contends that plaintiff or its predecessors in interest thru %fraud or error and without &nowledge (of) or interest either personal or thru pu#lication to defendant andMor predecessors in interest.% +he answer therefore prays that the complaint #e dismissed with costs and plaintiff reFuired to reconvey the land to defendant or pay its value. +( - rendered *udgment for plaintiff Ane of the defendant,s contentions is that the trial court erred in not dismissing the case on the ground that the case was not #rought #y the real party in interest. ISS-E, 6A= the case should #e dismissed for it was not #rought #y the real party in interestE

HE0+, =A. 6hat the .ules of (ourt reFuire is that an action #e #rought in the name of, #ut not necessarily by, the real party in interest. (2ection >, .ule >.) 1n fact the practice is for an attorney-at-law to #ring the action, that is to file the complaint, in the name of the plaintiff. +hat practice appears to have #een followed in this case, since the complaint is signed #y the law firm of Araneta and Araneta, %counsel for plaintiff% and commences with the statement %comes now plaintiff, through its undersigned counsel.% It is tr e that the "o;plaint also states that the plainti<< is Erepresented herein &! its Managing Partner Gregorio Araneta( In"5E( another "orporation( & t there is nothing against one "orporation &eing represented &! another person( nat ral or F ridi"al( in a s it in "o rt5 The "ontention that Gregorio Araneta( In"5 "annot a"t as ;anaging partner <or plainti<< on the theor! that it is illegal <or tGo "orporations to enter into a partnership is Githo t ;erit( <or the tr e r le is that Etho gh a "orporation has no poGer to enter into a partnership( it ;a! nevertheless enter into a Foint vent re Gith another Ghere the nat re o< that vent re is in line Gith the & siness a thoriHed &! its "harter5E (6yoming-1ndiana Ail <as (o. vs. 6eston, 8? A. 8. .., 1?!@, citing > /letcher (yc. of (orp., 1?8>.) +here is nothing in the record to indicate that the venture in which plaintiff is represented #y <regorio Araneta, 1nc. as %its managing partner% is not in line with the corporate #usiness of either of them. A r&a"h vs5 Sanitar! 3ares # Mi6e /5 +his consolidated petition assailed the decision of the (A directing a certain ;A==4. A/ 484(+1A= A/ A//1(4.2 1= +74 GAA.- A/ -1.4(+A.2 N+here are two groups in this case, the 0agda;eo gro p composed of /ilipino investors and the A;eri"an Standard In". (A21) composed of foreign investors. +he A21 <roup and petitioner 2ala:ar (<... =os. 0D 0D-0") contend that the actual intention of the parties should #e viewed strictly on the %Agreement% dated August 1D,1 "> wherein it is clearly stated that the partiesC intention was to form a corporation and not a JB 15 67A were the duly elected directorsE // factors should #e determined5 N(1) the nature of the #usiness esta#lished #y the parties whether it was a *oint venture or a corporation 75 -6hile certain provisions of the Agreement would ma&e it appear that the parties thereto disclaim #eing partners or *oint venturers such disclaimer is directed at third parties and is not inconsistent with, and does not preclude, the e$istence of two distinct groups of stoc&holders in 2aniwares one of which (the 'hilippine 1nvestors) shall constitute the ma*ority, and the other A21 shall constitute the minority stoc&holder. 1n any event, the evident intention of the 'hilippine 1nvestors and A21 in entering into the Agreement is to enter into a Foint vent re enterprise - An e$amination of the Agreement shows that certain provisions were inccuded to protect the interests of A21 as the minority. /or e$ample, the vote of 0 out of directors

is reFuired in certain enumerated corporate acts. A21 is contractually entitled to designate a mem#er of the 4$ecutive (ommittee and the vote of this mem#er is reFuired for certain transactions - +he Agreement also reFuires a 0D% super-ma*ority vote for the amendment of the articles and #y-laws of 2aniwares. A21 is also given the right to designate the president and plant manager .+he Agreement further provides that the sales policy of 2aniwares shall #e that which is normally followed #y A21 and that 2aniwares should not e$port %2tandard% products otherwise than through A21Cs 4$port ;ar&eting 2ervices. 3nder the Agreement, A21 agreed to provide technology and &now-how to 2aniwares R the latter paid royalties for the same. - JB generally understood to mean an organi ation formed for some temporary purpose. !t is in fact hard"y distinguishab"e from the partnership, since their e"ements are simi"ar community of interest in the business, sharing of profits and "osses, and a mutua" right of contro". - +he main distinction cited #y most opinions in common law *urisdictions is that the partnership "onte;plates a general & siness Gith so;e degree o< "ontin it! , while the Foint vent re is <or;ed <or the exe" tion o< a single transa"tion( and is th s o< a te;porar! nat re. +el ao vs5 Casteel /A(+25 =icanor (asteel, as the first occupant, filed a fishpond application for a #ig tract of swampy land in -avao. Gecause of the threat poised upon #y su#seFuent applicants who entered upon and spread themselves within the area, (asteel reali:ed the urgent necessity of e$panding his occupation #y constructing di&es and cultivating mar&eta#le fishes, in order to prevent old and new sFuatters from usurping the land. Gut lac&ing financial resources, he sought financial aid from his uncle /elipe -eluao who then e$tended loans totaling more or less '>0,??? with which to finance the needed improvements on the fishpond. Gecause of the loan, (asteel and -eluao entered into a %contract of service% with the agreement to divide the su#*ect property after the awardM grant of application #y the <overnment to (asteel. +hereafter, a wide productive fishpond was #uilt. 4ventually, after relentlessly pursuing his claim, the land was finally awarded to (asteel. After a time, (asteel for#ade 1nocencia -eluao from further administering the fishpond, and e*ected the latterCs representative from the premises. Alleging violation of the contract of service, spouses -eluao filed an action for specific performance and damages against =icanor (asteel 122345 6hether or not #oth parties may validly divide the fishpond as agreed upon #y them. 748-5 =A.

+he evidence preponderates in favor of the view that the initial intention of the parties was not to form a co-ownership #ut to esta#lish a partnership O 1nocencia -eluao as capitalist partner and (asteel as industrial partner O the ultimate underta&ing of which was to divide into two eFual parts such portion of the fishpond as might have #een developed #y the amount e$tended #y the plaintiffs-appellees, with the further provision that (asteel should reim#urse the e$penses incurred #y the appellees over one-half of the fishpond that would pertain to him. 2ince the partnership had for its o#*ect the division into two eFual parts of the fishpond #etween the appellees and the appellant after it shall have #een awarded to the latter, and therefore it envisaged the unauthori ed transfer of one-half to parties other than the applicant (asteel, it was dissolved #y the approval of his application and the award to him of the fishpond. +he approval was an event which made it unlawful for the #usiness of the partnership to #e carried on or for the mem#ers to carry it on in partnership thus dissolving the same. As reiterated in Art. 18@?(@) of the (ivil (ode, one of the causes for the dissolution of a partnership, %... any event which ma&es it unlawful for the #usiness of the partnership to #e carried on or for the mem#ers to carry it on in partnership.% +he approval of the appellantCs fishpond application #rought to the fore several provisions of law which made the continuation of the partnership unlawful and therefore caused its ipso facto dissolution. +he case was remanded to the lower court for the reception of evidence relative to an accounting to determine profits and shares reali:ed #y #oth parties. Ar&es v Polisti"o Iris /acts5 Ar#es et al (plaintiffs) were mem#ers or shareholders of +urnuhan 'olistico and 'olistico et al (defendants) were directors, president-treasurer and secretary of the association. +his case has #een #rought for the second time to the 2(. +he first one was when the same plaintiffs appeared from the order of the court #elow sustaining the defendantCs demurrer, and reFuiring the former to amend their complaint within a period, so as to include all the mem#ers of %+urnuhan 'olistico R (o.,% either as plaintiffs or as defendants. +his 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 mem#ers of the association #e made parties to the action. (Gorlasa vs. 'olistico, !0 'hil., @!D.) Suintos, of the 1nsular AuditorCs Affice, was appointed to e$amine all the #oo&s, documents, and accounts of %+urnuhan 'olistico R (o.,% and to receive whatever evidence the parties might desire to present. 'olistico et al o#*ected to the commissionerCs report. +he .+(, however, held that the association %+urnuhan 'olistico R (o.% is unlawful, and sentenced the defendants *ointly and severally to return the amount of '>!,"?0.8?, as

well as the documents showing the uncollected credits of the association, to Ar#es, et al in and to the rest of the mem#ers of the said association represented #y said plaintiffs. 'olistico et al contend that #ecause %+urnuhan 'olistico R (o.,% is unlawful, some charita#le institution to whom the partnership funds may #e ordered to #e turned over, should #e included, as a party defendant. +he appellants refer to article 1""" of the (ivil (ode, which provides5 A partnership must have a lawful o#*ect, and must #e esta#lished for the common #enefit of the partners. 6hen the dissolution of an unlawful partnership is decreed, the profits shall #e given to charita#le institutions of the domicile of the partnership, or, in default of such, to those of the province. 1ssue5 6M= the charita#le institutions are considered as necessary parties for the total disposition of this caseE 7eld5 =o. +he partnership is an unlawful partnership. According to paragraph > of Art 1""" of the (ivil (ode, when an unlawful partnership is *udicially dissolved, the earnings shall not #e disposed of as profits, #ut shall #e give to charita#le institutions. Gut in a case li&e the one at #ar, whose o#*ect is to determine the rights of the parties, and to liFuidate the unlawful partnership, no charita#le institution should #e included as defendant, as the appellants content, #ecause it is not a necessary party to the case. Art. 1""" of the (ivil (ode allows no action for the purpose of o#taining the earnings made #y the unlawful partnership, during its e$istence, as a result of the #usiness in which it was engaged9 #ecause for that purpose the partner will have to #ase his action on the partnership contract which is null and without legal e$istence #y reason of its unlawful o#*ect, and it is self-evident that what does not e$ist cannot #e a cause of action. /ernandeH vs5 +e la Rosa /a"ts, An the part of plaintiff /ernande:, he claims that he entered into a ver#al agreement with defendant -e la .osa to form a partnership for the purchase of cascoes with the underta&ing that the defendant will #uy the cascoes and that each partner will furnish such amount as he could, while the profits will #e divided proportionately. 'laintiff furnished '@?? for casco =o. 1D1D and '8>D for casco =o. >?8 , #oth of which were placed under the name of the defendant only. 1n April 1 ??, the parties undertoo& to draw up articles of their partnership for the purpose of em#odying it in an authentic document. +he agreement however did not materiali:e #ecause defendant proposed articles which were materially different from their ver#al agreement, and he was also unwilling to include casco =o. >?8 in the partnership. Gecause the cascoes were under the management of the defendant, the plaintiff demanded an accounting over it to which the defendant refused claiming that no partnership e$isted #etween them. -e la .osa, on the other hand, admits that he desired to form a partnership with the plaintiff #ut denies that any agreement was ever consummated. ;oreover, he denied

receiving any money furnished #y plaintiff for casco =o. 1D1D, #ut claims that he merely #orrowed the '@?? on his individual account from the #a&ery #usiness in which plaintiff was a co-partner. And as for the '8>D furnished #y the plaintiff, the defendant claims that it was actually for casco =o. 1D1D and not for casco =o. >?8 . 7e also added that the repairs made on the two cascoes were e$clusively #orne #y him, and that he returned a sum of '1,1>D to plaintiff with an e$press reservation on his part of all his rights as a partner. Iss e, a) 6M= a partnership e$isted #etween the parties. Jes. #) 6M= the partnership was terminated when the defendant returned the '1,1>D to plaintiff. =o. Held, a) +he essential points upon which the minds of the parties must meet in a contract of partnership are 1) mutual contri#ution and >) *oint interest in the profits. +he fact that the defendant received money furnished #y the plaintiff for the purpose of using it to purchase the cascoes esta#lishes the first element of the partnership, mutual contri#ution to a common stoc&. /or the second element, the fact that the formation of partnership had #een a su#*ect of negotiation #etween them, even #efore the purchase of the first casco, and that #oth parties intended to purchase the cascoes in common satisfies the reFuirement that there should #e an intention on the part of #oth parties to share the profits. 6ith these, a complete and perfect contract of partnership was entered into #y the parties. 1t must #e noted however that this partnership was su#*ect to a suspensive condition which is the e$ecution of a written agreement regarding the distri#ution of profits, character of partnership, etc. Gut since the defendant actually purchased the cascoes, it would seem that the partnership already e$isted. And as furthermore provided #y the (ivil (ode, a written agreement was not necessary in order to give efficacy to the ver#al agreement of the partnership #ecause the contri#utions of the partners to the partnership were not in the form of immova#les. #) -uring trial, the court was a#le to prove that plaintiff actually furnished some amount for the repair of the cascoes and that it was presumed that a profit has #een o#tained #y the defendant prior to the return of the money. 6ith these, the return of the '1,1>D fell short of the amount which the plaintiff has actually contri#uted to the partnership. /or these reasons, the acceptance #y the plaintiff of the amount returned #y the defendant did not have the effect of terminating the legal e$istence of the partnership #y converting it into a societas leonina. +he court also proved that there was no intention on the part of the plaintiff, in accepting the money, to relinFuish his rights as a partner. An the contrary he notified defendant that he waived none of his rights in the partnership. Also the lac& of recognition on the part of the defendant of the plaintiff,s right in the partnership property and in the profits does not give the former the right to force a dissolution upon the later upon the terms which the plaintiff is unwilling to accept. A partnership therefore e$isted #etween the two and cascoes =o. 1D1D and >?8 are partnership properties. .ealu#it v Jaso K (ary <... =o. 10808> 2eptem#er >1, >?11

JA24/1=A '. .4A83G1+, 'etitioner, vs. '.A24=(1A -. JA2A and 4-4= <. JA2A, .espondents. -4(121A= '4.4I, J.5 /acts5 Josefina .ealu#it (Josefina) entered into a Joint Benture Agreement with /rancis 4ric Amaury Giondo (Giondo), for the operation of an ice manufacturing #usiness. 6ith Josefina as the industrial partner and Giondo as the capitalist partner. /or and in consideration of the sum of 'D??,???.??, however, Giondo su#seFuently e$ecuted a -eed of Assignment, transferring all his rights and interests in the #usiness in favor of respondent 4den Jaso (4den), the wife of respondent 'rosencio Jaso. +he 2pouses Jaso caused their lawyer to send Josefina a letter apprising her of their acFuisition of said /renchman,s share in the #usiness and formally demanding an accounting and inventory thereof as well as the remittance of their portion of its profits. /aulting Josefina with un*ustified failure to heed their demand, the 2pouses Jaso commenced the instant (omplaint against Josefina and her hus#and, for specific performance, accounting, e$amination, audit and inventory of assets and properties, dissolution of the *oint venture, appointment of a receiver and damages. 1ssue5 674+74. +74 (A3.+ ;AJ A.-4. '4+1+1A=4. TJA24/1=A .4A83G1+U A2 'A.+=4. 1= +74 JA1=+ B4=+3.4 +A .4=-4. TAU= A((A3=+1=< +A A=4 67A 12 =A+ A 'A.+=4. 1= 2A1- JA1=+ B4=+3.4. 7eld5 6e find the petition #ereft of merit. <enerally understood to mean an organi:ation formed for some temporary purpose, a *oint venture is li&ened to a particular partnership or one which %has for its o#*ect determinate things, their use or fruits, or a specific underta&ing, or the e$ercise of a profession or vocation.% +he rule is settled that *oint ventures are governed #y the law on partnerships which are, in turn, #ased on mutual agency or delectus personae. 1nsofar as a partner,s conveyance of the entirety of his interest in the partnership is

concerned, Article 181@ of the (ivil (ode provides as follows5 Art. 181@. A conveyance #y a partner of his whole interest in the partnership does not itself dissolve the partnership, or, as against the other partners in the a#sence of agreement, entitle the assignee, during the continuance of the partnership, to interfere in the management or administration of the partnership #usiness or affairs, or to reFuire any information or account of partnership transactions, or to inspect the partnership #oo&s9 #ut it merely entitles the assignee to receive in accordance with his contracts the profits to which the assigning partners would otherwise #e entitled. 7owever, in case of fraud in the management of the partnership, the assignee may avail himself of the usual remedies. 1n the case of a dissolution of the partnership, the assignee is entitled to receive his assignor,s interest and may reFuire an account from the date only of the last account agreed to #y all the partners. /rom the foregoing provision, it is evident that %(t)he transfer #y a partner of his partnership interest does not ma&e the assignee of such interest a partner of the firm, nor entitle the assignee to interfere in the management of the partnership #usiness or to receive anything e$cept the assignee,s profits. +he assignment does not purport to transfer an interest in the partnership, #ut only a future contingent right to a portion of the ultimate residue as the assignor may #ecome entitled to receive #y virtue of his proportionate interest in the capital.% 2ince a partner,s interest in the partnership includes his share in the profits, we find that the (A committed no reversi#le error in ruling that the 2pouses Jaso are entitled to Giondo,s share in the profits, despite Juanita,s lac& of consent to the assignment of said /renchman,s interest in the *oint venture. Although 4den did not, moreover, #ecome a partner as a conseFuence of the assignment andMor acFuire the right to reFuire an accounting of the partnership #usiness, the (A correctly granted her prayer for dissolution of the *oint venture conforma#ly with the right granted to the purchaser of a partner,s interest under Article 18@1 of the (ivil (ode. 'rimelin& 'roperties v 8a:atin-;agat K Galdr .espondent then filed a collection suit against (hua, Jao and 'ded. <iven the preceding facts, it is clear that there was, among petitioner, (hua and Jao, a partnership engaged in the fishing #usiness. +hey purchased the #oats, which constituted the main assets of the partnership, and they agreed that the proceeds from the sales and operations thereof would #e divided among them.

G. 'artnership as a (ontract - Art. 10"

$arantilla $r v $arantilla Iris /A(+25 +he present case stems from the complaint filed #y Antonieta Jarantilla against Guenaventura .emotigue, (ynthia .emotigue, /ederico Jarantilla, Jr., -oroteo Jarantilla and +omas /A(+25 1n 1 !, 'rimelin& 'roperties and the 8a:atin si#lings entered into a *oint venture agreement where#y the 8a:atins shall contri#ute a huge parcel of land and 'rimelin& shall develop the same into a su#division. /or ! years however, 'rimelin& failed to develop the said land. 2o in 1 8, the 8a:atins filed a complaint to rescind the *oint venture agreement with prayer for preliminary in*unction. 1n said case, 'rimelin& was declared in default or failing to II5 NAT-RE and CHARACTERISTICS T%CA% and BE0% v CA and ANAY # Mi6e 6illiam Gelo introduced =enita Anay to his girlfriend, ;ar*orie +ocao. +he three agreed to form a JB for the sale of coo&ing wares. Gelo was to contri#ute '>.D million9 +ocao also contri#uted some cash and she shall also act as president and <;9 and Anay shall #e in charge of mar&eting. Gelo and +ocao specifically as&ed Anay #ecause of her e$perience and connections as a mar&eter. +hey agreed further that Anay shall receive the following5 1?% share of annual net profits MM "% overriding commission for wee&ly sales MM @?% of sales Anay will ma&e herself MM >% share for her demo services +hey operated under the name <eminesse 4nterprise, this name was however registered as a sole proprietorship with the Gureau of -omestic +rade under +ocao. +he JBA was not reduced to writing #ecause Anay trusted Gelo,s assurances. +he venture succeeded under Anay,s mar&eting prowess. Gut then Anay and +ocao,s relationship soured. Ane day, +ocao advised one of the #ranch managers that Anay was no longer a part of the company. Anay then demanded that the company #e audited R her shares given to her. ISS-E, 6hether or not there is a partnership. HE0+, Jes, though not reduced to writing, for a partnership can #e instituted in any form. +he fact that it was registered as a sole proprietorship is of no moment for such registration was only for its trade name.

Anay was not even an employee #ecause when they ventured into the agreement, they e$plicitly agreed to profit sharing this is even though Anay was receiving commissions #ecause this is only incidental to her efforts as a head mar&eter. +he 2upreme (ourt also noted that a partner who is e$cluded wrongfully from a partnership is an innocent partner. 7ence, the guilty partner must give him his due upon the dissolution of the partnership as well as damages or share in the profits Hreali:ed from the appropriation of the partnership #usiness and goodwill.) An innocent partner thus possesses Hpecuniary interest in every e$isting contract that was incomplete and in the trade name of the co-partnership and assets at the time he was wrongfully e$pelled.) An un*ustified dissolution #y a partner can su#*ect him to action for damages #ecause #y the mutual agency that arises in a partnership, the doctrine of de"ectus personae allows the partners to have the po#er, although not necessarily the right to dissolve the partnership. +ocao,s unilateral e$clusion of Anay from the partnership is shown #y her memo to the (u#ao office plainly stating that Anay was, as of Acto#er , 1 80, no longer the vicepresident for sales of <eminesse 4nterprise. Gy that memo, petitioner +ocao effected her own withdrawal from the partnership and considered herself as having ceased to #e associated with the partnership in the carrying on of the #usiness. =evertheless, the partnership was not terminated there#y9 it continues until the winding up of the #usiness. N%TE, ;otion for .econsideration filed #y +ocao and Gelo decided #y the 2( on 2eptem#er >?, >??1. Gelo is not a partner. Anay was not a#le to prove that Gelo in fact received profits from the company. Gelo merely acted as a guarantor. 7is participation in the #usiness meetings was not as a partner #ut as a guarantor. 7e in fact had only limited partnership. +ocao also testified that Gelo received nothing from the profits. 2( also noted that the partnership was yet to #e registered in the 24(. As such, it was understanda#le that Gelo, who was after all petitioner +ocao,s good friend and confidante, would occasionally participate in the affairs of the #usiness, though never in a formal or official capacity. T%RRES v CA 1n 1 " , sisters Antonia +orres and 4meteria Garing entered into a *oint venture agreement with ;anuel +orres. 3nder the agreement, the sisters agreed to e$ecute a deed of sale in favor ;anuel over a parcel of land, the sisters received no cash payment from ;anuel #ut the promise of profits ("?% for the sisters and !?% for ;anuel) K said parcel of land is to #e developed as a su#division. ;anuel then had the title of the land transferred in his name and he thereafter

mortgaged the property. 7e used the proceeds from the mortgage to start #uilding roads, cur#s and gutters. ;anuel also contracted an engineering firm for the #uilding of housing units. Gut due to adverse claims in the land, prospective #uyers were scared off and the su#division pro*ect eventually failed. +he sisters then filed a civil case against ;anuel for damages eFuivalent to "?% of the value of the property, which according to the sisters, is what,s due them as per the contract. +he lower court ruled in favor of ;anuel and the (ourt of Appeals affirmed the lower court. +he sisters then appealed #efore the 2upreme (ourt where they argued that there is no partnership #etween them and ;anuel #ecause the *oint venture agreement is void. ISS-E, 6hether or not there e$ists a partnership. HE0+, Jes. +he *oint venture agreement the sisters entered into with ;anuel is a partnership agreement where#y they agreed to contri#ute property (their land) which was to #e developed as a su#division. 6hile on the other hand, though ;anuel did not contri#ute capital, he is an industrial partner for his contri#ution for general e$penses and other costs. /urthermore, the income from the said pro*ect would #e divided according to the stipulated percentage ("?-!?). (learly, the contract manifested the intention of the parties to form a partnership. /urther still, the sisters cannot invo&e their right to the "?% value of the property and at the same time deny the same contract which entitles them to it. At any rate, the failure of the partnership cannot #e #lamed on the sisters, nor can it #e #lamed to ;anuel (the sisters on their appeal did not show evidence as to ;anuel,s fault in the failure of the partnership). +he sisters must then #ear their loss (which is "?%). ;anuel does not #ear the loss of the other !?% #ecause as an industrial partner he is e$empt from losses. 0i; Tong 0i; v Phil /ishing Gear Ind5 In" Bian"a G5R5 No5 7AJ''B Nove;&er A( 7888 0IM T%NG 0IM( petitioner( vs5 PHI0IPPINE /ISHING GEAR IN+-STRIES( INC5( respondent5 A partnership may #e deemed to e$ist among parties who agree to #orrow money to pursue a #usiness and to divide the profits or losses that may arise therefrom, even if it is shown that they have not contri#uted any capital of their own to a %common fund.% +heir contri#ution may #e in the form of credit or industry, not necessarily cash or fi$ed assets. Geing partner, they are all lia#le for de#ts incurred #y or on #ehalf of the partnership. +he lia#ility for a contract entered into on #ehalf of an unincorporated

association or ostensi#le corporation may lie in a person who may not have directly transacted on its #ehalf, #ut reaped #enefits from that contract. /a"ts, An #ehalf of %Acean Suest /ishing (orporation,% Antonio (hua and 'eter Jao entered into a (ontract for the purchase of fishing nets of various si:es from the 'hilippine /ishing <ear 1ndustries, 1nc. (respondent). +hey claimed that they were engaged in a #usiness venture with 'etitioner 8im +ong 8im, who however was not a signatory to the agreement. +he #uyers, however, failed to pay for the fishing nets and the floats. file an answer and for as&ing multiple motions for e$tension. +he trial court eventually ruled in favor of the 8a:atins and it ordered 'rimelin& to return the possession of said land to the 8a:atins as well as some improvements which 'rimelin& had so far over the property without the 8a:atins paying for said improvements. +his decision was affirmed #y the (ourt of Appeals. 'rimelin& is now assailing the order9 that turning over improvements to the 8a:atins without reim#ursement is un*ust9 that the 8a:atins did not as& the properties to #e placed under their possession #ut they merely as&ed for rescission. 122345 6hether or not the improvements made #y 'rimelin& should also #e turned over under the possession of the 8a:atins. 748-5 Jes. 1n the first place, even though the 8a:atins did specifically pray for possession the same (placing of improvements under their possession) is incidental in the relief they prayed for. +hey are therefore entitled possession over the parcel of land plus the improvements made thereon made #y 'rimelin&. 1n this *urisdiction, *oint ventures are governed #y the laws of partnership. 3nder the laws of partnership, when a partnership is dissolved, as in this case when the trial court rescinded the *oint venture agreement, the innocent party has the right to wind up the partnership affairs. 6ith the rescission of the JBA on account of petitioners, fraudulent acts, all authority of any partner to act for the partnership is terminated e$cept so far as may #e necessary to wind up the partnership affairs or to complete transactions #egun #ut not yet finished. An dissolution, the partnership is not terminated #ut continues until the winding up of partnership affairs is completed. 6inding up means the administration of the assets of the partnership for the purpose of terminating the #usiness and discharging the o#ligations of the partnership. 1t must #e stressed, too, that although the 8a:atins acFuired possession of the lands and the improvements thereon, the said lands and improvements remained partnership property, su#*ect to the rights and o#ligations of the parties, inter se, of the creditors and

of third parties and su#*ect to the outcome of the settlement of the accounts #etween the parties, a#sent any agreement of the parties in their JBA to the contrary (here no agreement in the JBA as to winding up). 3ntil the partnership accounts are determined, it cannot #e ascertained how much any of the parties is entitled to, if at all. 7eirs of +an 4ng Vee v (A and Genguet 8um#er (o K 'at /acts5 +he complaint alleged that after the second 6orld 6ar, +an 4ng Vee and +an 4ng 8ay, pooling their resources and industry together, entered into a partnership engaged in the #usiness of selling lum#er and hardware and construction supplies. +hey named their enterprise %Genguet 8um#er% which they *ointly managed until +an 4ng VeeCs death. 'etitioners claimed that +an 4ng 8ay and his children caused the conversion of the partnership %Genguet 8um#er% into a corporation called %Genguet 8um#er (ompany.% 'etitioners prayed for accounting of the partnership assets, and the dissolution, winding up and liFuidation thereof, and the eFual division of the net assets of Genguet 8um#er. +he .+( ruled in favor of petitioners, declaring that Genguet 8um#er is a *oint venture which is a&in to a particular partnership. +he (ourt of Appeals rendered the assailed decision reversing the *udgment of the trial court. 1ssue5 6hether or not +an 4ng Vee and +an 4ng 8ay were partners in Genguet 8um#er. 7eld5 =A. +he trial court determined that +an 4ng Vee and +an 4ng 8ay had entered into a *oint venture, which it said is a&in to a particular partnership. A particular partnership is distinguished from a *oint adventure, to wit5 (a) A *oint adventure (an American concept similar to our *oint accounts) is a sort of informal partnership, with no firm name and no legal personality. 1n a *oint account, the participating merchants can transact #usiness under their own name, and can #e individually lia#le therefor. (#) 3sually, #ut not necessarily a *oint adventure is limited to a 21=<84 +.A=2A(+1A=, although the #usiness of pursuing to a successful termination may continue for a num#er of years9 a partnership generally relates to a continuing #usiness of various transactions of a certain &ind. A *oint venture %presupposes generally a parity of standing #etween the *oint co-ventures or partners, in which each party has an eFual proprietary interest in the capital or property contri#uted, and where each party e$ercises eFual rights in the conduct of the #usiness.%A review of the record persuades us that the (ourt of Appeals correctly reversed the decision of the trial court. +he evidence presented #y petitioners falls short of the Fuantum of proof reFuired to

esta#lish a partnership. 3nfortunately for petitioners, +an 4ng Vee has passed away. Anly he, aside from +an 4ng 8ay, could have e$pounded on the precise nature of the #usiness relationship #etween them. 1n the a#sence of evidence, we cannot accept as an esta#lished fact that +an 4ng Vee allegedly contri#uted his resources to a common fund for the purpose of esta#lishing a partnership. Gesides, it is indeed odd, if not unnatural, that despite the forty years the partnership was allegedly in e$istence, +an 4ng Vee never as&ed for an accounting. +he essence of a partnership is that the partners share in the profits and losses. 4ach has the right to demand an accounting as long as the partnership e$ists. A demand for periodic accounting is evidence of a partnership. -uring his lifetime, +an 4ng Vee appeared never to have made any such demand for accounting from his #rother, +ang 4ng 8ay. 6e conclude that +an 4ng Vee was only an employee, not a partner. 4ven if the payrolls as evidence were discarded, petitioners would still #e #ac& to sFuare one, so to spea&, since they did not present and offer evidence that would show that +an 4ng Vee received amounts of money allegedly representing his share in the profits of the enterprise. +here #eing no partnership, it follows that there is no dissolution, winding up or liFuidation to spea& of. 7ence,the petition must fail. 2evilla v (A K Jen +%CTRINE, A Foint vent re( in"l ding a partnership( pres pposes generall! a o< standing &etGeen the Foint "o#.vent rers or partners( in Ghi"h ea"h part! has an e> al proprietar! interest in the "apital or propert! "ontri& ted and Ghere ea"h part! exer"ises e> al rights in the "ond "t o< the & siness . NAT-RE, Appeal #y certiorari P%NENTE, 2armiento, J. /ACTS, 75 An the strength of a contract entered into #y and #etween ;rs. 2egundina =oguera and the +ourist 6orld 2ervice, 1nc., represented #y ;r. 4liseo (anilao, the +ourist 6orld 2ervice, 1nc. leased the premises #elonging to =oguera at ;a#ini 2t., ;anila for the former,s use as a #ranch office. 6hen the #ranch office was opened, the same was run #y the herein appellant 8ina 2evilla. >. +he +ourist 6orld 2ervice, 1nc. appears to have #een informed that 8ina

2evilla was connected with a rival firm, the 'hilippine +ravel Gureau, and, since the #ranch office was anyhow losing, the +ourist 6orld 2ervice considered closing down its office. +his was firmed up #y two resolutions of the #oard of directors of +ourist 6orld 2ervice, 1nc. the first a#olishing the office of the manager and vice-Lpresident of the +ourist 6orld 2ervice, 1nc., 4rmita Granch, and the second, authori:ing the corporate secretary to receive the properties of the +ourist 6orld 2ervice then located at the said #ranch office. +o comply with the mandate of the +ourist 6orld 2ervice, the corporate secretary <a#ino (anilao went over to the #ranch office, and, finding the premises loc&ed, and, #eing una#le to contact 8ina 2evilla, he padloc&ed the premises on June !, 1 "> to protect the interests of the +ourist 6orld 2ervice. A5 6hen neither the appellant 8ina 2evilla nor any of her employees could enter the loc&ed premises, a "o;plaint Gas <iled &! the herein appellants against the appellees Gith a pra!er <or the iss an"e o< ;andator! preli;inar! inF n"tion5 Both appellees ansGered Gith "o nter"lai;s5 /or apparent lac& of interest of the parties therein, the trial "o rt ordered the dis;issal o< the "ase Githo t preF di"e5 !. +he appellee 2egundina =oguera sought reconsideration of the order dismissing her counterclaim which the court a Fuo, in an order dated June 8, 1 "@, granted permitting her to present evidence in support of her counterclaim. D. Appellant 8ina 2evilla refiled her case against the herein appellees and after the issues were *oined, the reinstated counterclaim of 2egundina =oguera and the new complaint of appellant 8ina 2evilla were *ointly heard following which the court a Fuo ordered #oth cases dismiss for lac& of merit ISS-ES, 3%N there Gas a partnership &etGeen To rist 3orld Servi"e and 0ina Sevilla HE0+, N% RATI%2R-0ING, 75 +he (ourt is as&ed to declare the true nature of the relation #etween 8ina 2evilla and +ourist 6orld 2ervice, 1nc. +he respondent (ourt of see fit to rule on the Fuestion, the crucial issue, in its opinion #eing %whether or not the padloc&ing of the premises #y the +ourist 6orld 2ervice, 1nc. without the &nowledge and consent of the appellant 8ina 2evilla entitled the latter to the relief of damages prayed for and Ghether or not the eviden"e <or the said appellant s pports the "ontention that the appellee To rist 3orld Servi"e( In"5 nilaterall! and Githo t the "onsent o< the appellant dis"onne"ted the telephone lines o< the Er;ita &ran"h o<<i"e o< the appellee To rist 3orld Servi"e( In"5 >. To rist 3orld Servi"e( In"5( insists( on the other hand( that 0ina SE4I00A Gas a ;ere e;plo!ee( &eing E&ran"h ;anagerE o< its Er;ita E&ran"hE o<<i"e and that in<erentiall!( she had no sa! on the lease exe" ted Gith the private respondent( Seg ndina Nog era5

@. The petitioners "ontend( hoGever( that relation &etGeen the &etGeen parties Gas one o< Foint vent re, #ut concede that $#hatever might have been the true re"ationship bet#een %evi""a and Tourist &or"d %ervice,$ the .ule of 8aw en*oined +ourist 6orld 2ervice and (anilao from ta&ing the law into their own hands, in reference to the padloc&ing now Fuestioned. !. +he (ourt finds the resolution of the issue material, for if, as the private respondent, +ourist 6orld 2ervice, 1nc., maintains, that the relation #etween the parties was in the character of employer and employee, the courts would have #een without *urisdiction to try the case, la#or disputes #eing the e$clusive domain of the (ourt of 1ndustrial .elations, later, the Gureau Af 8a#or .elations, pursuant to statutes then in force. D. The re"ords Gill shoG that the petitioner( 0ina Sevilla( Gas not s &Fe"t to "ontrol &! the private respondent To rist 3orld Servi"e( In"5( either as to the result of the enterprise or as to the means used in connection therewith. a. 1n the first place, under the contract of lease covering the +ourist 6orlds 4rmita office, she had #ound herself in so"idum as and for rental payments, an arrangement that would #e li&e claims of a master-Lservant relationship. +rue the respondent (ourt would later minimi:e her participation in the lease as one of mere guaranty, that does not ma&e her an employee of +ourist 6orld, since in any case, a true employee cannot #e made to part with his own money in pursuance of his employerCs #usiness, or otherwise, assume any lia#ility thereof. 1n that event, the parties must #e #ound #y some other relation, #ut certainly not employment. #. 1n the second place, and as found #y the Appellate (ourt, CTwUhen the #ranch office was opened, the same was run #y the herein appellant 8ina A. 2evilla paya#le to +ourist 6orld 2ervice, 1nc. #y any airline for any fare #rought in on the effort of ;rs. 8ina 2evilla. 3nder these circumstances, it cannot #e said that 2evilla was under the control of +ourist 6orld 2ervice, 1nc. %as to the means used.% 2evilla in pursuing the #usiness, o#viously relied on her own gifts and capa#ilities. ". 1t is further admitted that Sevilla Gas not in the "o;pan!Ks pa!roll5 /or her e<<orts( she retained 'L in "o;;issions <ro; airline &oo6ings( the re;aining AL going to To rist 3orld5 -nli6e an e;plo!ee then( Gho earns a <ixed salar! s all!( she earned "o;pensation in <l "t ating a;o nts depending on her &oo6ing s ""esses. :5 +he fact that 2evilla had #een designated C#ranch manager% does not ma&e her +ourist 6orldCs employee. As we said, e;plo!;ent is deter;ined &! the right#.o<#. "ontrol test and "ertain e"ono;i" para;eters5 8. In reFe"ting To rist 3orld Servi"e( In"5Ks arg ;ents hoGever( Ge are not( as a "onse> en"e( a""epting 0ina SevillaKs oGn( that is( that the parties had e;&ar6ed on a Foint vent re or otherGise( a partnership5 And apparentl!( Sevilla hersel< did not re"ogniHe the existen"e o< s "h a relation5 1n her letter of =ovem#er >8, 1 "1, she e$pressly Cconcedes your T+ourist 6orld 2ervice, 1nc.CsU right to stop the operation of your #ranch office in effect,

accepting +ourist 6orld 2ervice, 1nc.Cs control over the manner in which the #usiness was run. A Foint vent re( in"l ding a partnership( pres pposes generall! a o< standing &etGeen the Foint "o#. vent rers or partners( in Ghi"h ea"h part! has an e> al proprietar! interest in the "apital or propert! "ontri& ted and Ghere ea"h part! exer"ises e> al rights in the "ond "t o< the & siness. . /urthermore, the parties did not hold the;selves o t as partners( and the & ilding itsel< Gas e;&ellished Gith the ele"tri" sign ETo rist 3orld Servi"e( In"5 in lie o< a distin"t partnership na;e5 7*5 1t is the (ourtCs considered opinion, Ghen the petitioner( 0ina Sevilla( agreed to ?Go@;an the private respondent( To rist 3orld Servi"e( In"5Ks Er;ita o<<i"e( she ; st have done so p rs ant to a "ontra"t o< agen"! . 1t is the essence of this contract that the agent renders services %in representation or on #ehalf of another. 1n the case at #ar, 2evilla solicited airline fares, #ut she did so for and on #ehalf of her principal, +ourist 6orld 2ervice, 1nc. As compensation, she received !% of the proceeds in the concept of commissions. And as we said, 2evilla herself #ased on her letter of =ovem#er >8, 1 "1, pre-Lassumed her principalCs authority as owner of the #usiness underta&ing. 3e are "onvin"ed( "onsidering the "ir" ;stan"es and <ro; the respondent Co rtKs re"ital o< <a"ts( that the ties had "onte;plated a prin"ipal agent relationship( rather than a Foint ;anaga;ent or a partnership5 11. Gut unli&e simple grants of a power of attorney, the agency that we here#y declare to #e compati#le with the intent of the parties, cannot #e revo&ed at will. +he reason is that it is one coupled with an interest, the agency having #een created for mutual interest, of the agent and the principal. 1t appears that 8ina 2evilla is a bona fide travel agent herself, and as such, she had acFuired an interest in the #usiness entrusted to her. ;oreover, she had assumed a personal o#ligation for the operation thereof, holding herself solidarily lia#le for the payment of rentals. 2he continued the #usiness, using her own name, after +ourist 6orld had stopped further operations. 7er interest, o#viously, is not to the commissions she earned as a result of her #usiness transactions, #ut one that e$tends to the very su#*ect matter of the power of management delegated to her. 1t is an agency that, as we said, cannot #e revo&ed at the pleasure of the principal. Accordingly, the revocation complained of should entitle the petitioner, 8ina 2evilla, to damages. +ISP%SITI%N, 674.4/A.4, the -ecision promulgated on January >@, 1 0D as well as the .esolution issued on July @1, 1 0D, #y the respondent (ourt of Appeals is here#y .4B4.24- and 24+ A21-4. +he private respondent, +ourist 6orld 2ervice, 1nc., and 4liseo (anilao, are A.-4.4- *ointly and severally to indemnify the petitioner, 8ina 2evilla, the sum of >D,??.?? as and for moral damages, the sum of '1?,???.??, as and for e$emplary damages, and the sum of 'D,???.??, as and for nominal andMor temperate damages. 4%TE, All "on" r

Gourns v (arman K (iv -ietrich v /reeman - Gianca G5R5 No5 0#J)9) $an ar! )B( 7877 GE%RGE %5 +IETRICH( plaintiff-appellee, vs. %5I5 /REEMAN( $AMES 05 PIERCE( and B-RT%N 3HITC%MB( defendants. B-RT%N 3HITC%MB( appellant. /a"ts, A.V. /reeman, James 8. 'ierce, and Gurton 6hitcom# (as owners and operators of the ;anila 2team 8aundry) filed a complaint to recover the sum of ' D> alleged to #e the #alance due the plaintiff for services rendered in favor of defendants. +(-/reeman and 6hitcom# were ordered to pay *ointly and severally, for the sum of '0D>, . +he complaint as to 'ierce was dismissed, 6hitcom# alone appealing. ISS-E, 6A= the court erred in ordering /reeman and 6hitcom# to pay *ointly and severally HE0+, YES5 1t appears from the record that 6hitcom# never &new the plaintiff, never had anything to do with personally, and that the plaintiffCs contract was with /reeman, the managing partner of the laundry. 1t further appears from the record that 'ierce, after he sold his interest in this laundry to 6hitcom#, continued to loo& after 6hitcom#Cs interest #y authority of the latter. +he partnership entered into #y /reeman and 6hitcom# show clearly that such partnership was not a commercial one9 hence the provisions of the (ivil (ode and not the (ode of (ommerce must govern in determining the lia#ility of the partners. 1n 'ourns vs. Carman, the partnership was one of cuentas en participacion. %A partnership,% Fuoting from the sylla#us in this case, %constituted in such a manner that its e$istence was only &nown to those who had an interest in the same, there #eing no mutual agreement #etween the partners, and without a corporate name indicating to the pu#lic in some way that there were other people #esides the one who ostensi#ly managed and conducted the #usiness, is e$actly the accidental partnership of cuentas en participacion defined in article >@ of the (ode of (ommerce.% 1n a partnership of cuentas en participacion, under the provisions of article >!> of the (ode of (ommerce, those who contract with the person in whose name the #usiness of such a partnership was conducted shall have only the right of action against such

person and not against other persons interested. 2o this case is easily distinguished from the case at #ar, in that the one did not have the corporate name while the other was &nown as the ;anila 2team 8aundry. +he plaintiff was employed #y and performed services for the ;anila 2team 8aundry and was not employed #y nor did he perform services for /reeman alone. +he pu#lic did not deal with /reeman and 6hitcom# personally, #ut with the ;anila 2team 8aundry. +hese two partners were doing #usiness under this name and, as we have said, it was not a commercial partnership. +herefore, #y the e$press provisions of articles 1" 8 and 11@0 of the (ivil (ode the partners are not lia#le individually for the entire amount due the plaintiff. +he lia#ility is pro rata and in this case the appellant is responsi#le to the plaintiff for only one-half of the de#t. /or these reasons the *udgment of the court #elow is reversed and *udgment entered in favor of the plaintiff and against the defendant 6hitcom# for the sum of '@0", with interest as fi$ed #y the court #elow Giglangawa v (onstantino - (iv %na vs5 CIR /5 1n 1 !! 8oren:o Ana was appointed administrator of the estate of his late wife Julia Gunales. +he administrator su#mitted the pro*ect of partition, which was approved #y the court. 7owever, there was no attempt was made to divide the properties among his D children. 1nstead, the properties remained under the management of 8oren:o who used the said properties in #usiness #y leasing or selling them and investing the income derived therefrom. 1n the years 1 !! to 1 D!, respondent (1. did treat petitioners as co-owners, not lia#le to corporate ta$, and it was only from 1 DD that (1. considered them as having formed an unregistered partnership. 15 6M= an unregistered partnership was formed. 75 - Jes. 1t is admitted that all profits from these ventures were divided among petitioners proportionately in accordance with their respective shares in the inheritance. N /rom the moment petitioners allowed not only the incomes from their respective shares #ut even the properties themselves to #e used #y 8oren:o as a common fund in underta&ing several transactions or #usiness, with the intention of deriving profit to #e shared #y them proportionately, such act was tantamount to actually contri#uting such incomes to a common fund and, in effect they there#y formed an unregistered partnership ta$a#le #y law. Re!es vs5 CIR

/5 'etitioners purchased a lot and #uilding. +he initial payment was shared eFually #y the respondents. At the time of the purchase, the #uilding was leased to various tenants, whose rights under the lease contracts with the original owners, the purchasers, petitioners herein, agreed to respect. +he administration of the #uilding was entrusted to an administrator who collected the rents9 &ept #oo&s and records and rendered statement of accounts to the owners. 'etitioners divided eFually the income of operation and maintenance. +he (+A held that petitioners formed a partnership ta$a#le #y law applying the ruling in 4vangelista case. 15 6M= petitioners indeed formed a partnership as contemplated #y law. 75 N Jes. +he essential elements of partnerships are present in this case, namely9 (a) an agreement to contri#ute money, property, or industry to a common fund9 and (#) intent to divide the profits among the contracting parties. N +he first was already admitted and therefore it #oils down to their intent in acting as they did. N 3pon consideration of the circumstances surrounding the case, it was found out that the petitioner,s purpose was to engage in real estate transactions for monetary gain and then divide the same among themselves. N 1n the case at #ar, there was a common fund used in a series of transactions9 the property thus acFuired was not used for residential or other purposes other than leasing. 2uch properties having #een under management #y one person with full power to lease and such condition e$isted for 1? years already. N +he collective effect of these circumstances is such as to leave no room for dou#t on the e$istence of said intent in the petitioners herein. Sardane vs5 CA /5 'etitioner advanced the theory that he is a partner of private respondent and not a mere employee inde#ted to the latter. 'etitioner,s #ases are the promissory notes e$ecuted #y private respondent in favor of petitioner as allegedly his share or contri#ution for the partnership. 15 6M= there e$ists a partnership #etween petitioner and private respondent. 75 =o. 6hile receipt of a share in the profits of the #usiness is a prima facie evidence that the person is receiving the same as a partner, no inference shall #e drawn if such profits were received in payment of his wages as an employee. %&illos vs5 CIR ('rofit merely incidental) /5 +his case is a#out the income ta$ lia#ility of four #rothers and sisters who sold two parcels of land which they had acFuired from their father. Co;;issioner o< Internal Reven e re> ired the <o r petitioners to pa! corporate

income tax on the total profit of '1@!,@@" in addition to individual income ta$ on their shares thereof 7e assessed '@0,?18 as corporate income ta$, '18,D? as D?% fraud surcharge and '1D,D!0.D" as !>% accumulated interest, or a total of P(),*(+.,-. +he (ommissioner acted on the theory that the four petitioners had formed an unregistered partnership or *oint venture within the meaning of sections >!(a) and 8!(#) of the +a$ (odeU 15 6M= an unregistered partnership was formed. 75 N =o. +heir original purpose was to divide the lots for residential purposes. 1f later on they found it not feasi#le to #uild their residences on the lots #ecause of the high cost of construction, then they had no choice #ut to resell the same to dissolve the coownership. N +he division of the profit was merely incidental to the dissolution of the coownership which was in the nature of things a temporary state. 1t had to #e terminated sooner or later. N Article 10" (@) of the (ivil (ode provides that %the sharing of gross returns does not of itself esta#lish a partnership, whether or not the persons sharing them have a *oint or common right or interest in any property from which the returns are derived%. There ; st &e an n;ista6a&le intention to <or; a partnership or Foint vent re5 0itonF a $r5 vs5 0itonF a Sr5( et al5 /ACTS, Aurelio and 4duardo are #rothers. 1n 1 0@, Aurelio alleged that 4duardo entered into a contract of partnership with him. Aurelio showed as evidence a letter sent to him #y 4duardo that the latter is allowing Aurelio to manage their family #usiness (if 4duardo,s away) and in e$change thereof he will #e giving Aurelio '1 million or 1?% eFuity, whichever is higher. A memorandum was su#seFuently made for the said partnership agreement. +he memorandum this time stated that in e$change of Aurelio, who *ust got married, retaining his share in the family #usiness (movie theaters, shipping and land development) and some other immova#le properties, he will #e given '1 ;illion or 1?% eFuity in all these #usinesses and those to #e su#seFuently acFuired #y them whichever is greater. 1n 1 >, however, the relationship #etween the #rothers turned sour. And so Aurelio demanded an accounting and the liFuidation of his share in the partnership. 4duardo did not heed which led to AurelioCs filing a suit against his #rother 4duardo for specific performance and accounting. ISS-E, 6hether or not there e$ists a partnership #etween the parties. HE0+, N%. +he partnership is void and legally none$istent. +he documentary evidence presented #y Aurelio, i.e. the letter from 4duardo and the ;emorandum, did not prove partnership.

+he 1 0@ letter from 4duardo on its face, contains typewritten entries, personal in tone, #ut is unsigned and undated. As an unsigned document, there can #e no Fui##ling that said letter does not meet the pu#lic instrumentation reFuirements e$acted under Article 1001 (how partnership is constituted) of the (ivil (ode. ;oreover, being unsigned and doubt"ess referring to a partnership invo"ving more than P.,***.** in money or property, said "etter cannot be presented for notari ation, "et a"one registered #ith the %ecurities and /0change Commission (%/C), as called for under the Article 100> (capitali:ation of a partnership) of the (ode. And inasmuch as the inventory reFuirement under the succeeding Article 100@ goes into the matter of validity when immova#le property is contri#uted to the partnership, the ne$t logical point of inFuiry turns on the nature of Aurelio,s contri#ution, if any, to the supposed partnership. +he ;emorandum is also not a proof of the partnership for the same is not a pu#lic instrument and again, no inventory was made of the immova#le property and no inventory was attached to the ;emorandum. Article 100@ of the (ivil (ode reFuires that if immova#le property is contri#uted to the partnership an inventory shall #e had and attached to the contract. A complaint for delivery and accounting of partnership property #ased on such void or legally non-e$istent actiona#le document is dismissi#le for failure to state of action. 674.4/A.4, the instant petition was -4=14Ag ila $r v CA Iris /acts5 1n April 1 1, the spouses .u#en and /elicidad A#rogar entered into a loan agreement with a lending firm called A.(. Aguila R 2ons, (o., a partnership. +he loan was for '>??&. +o secure the loan, the spouses mortgaged their house and lot located in a su#division. +he terms of the loan further stipulates that in case of non-payment, the property shall #e automatically appropriated to the partnership and a deed of sale #e readily e$ecuted in favor of the partnership. 2he does have a ?-day redemption period. .u#en died, and /elicidad failed to ma&e payment. 2he refused to turn over the property and so the firm filed an e*ectment case against her (wherein she lost). 2he also failed to redeem the property within the period stipulated. 2he then filed a civil case against Alfredo Aguila, manager of the firm, see&ing for the declaration of nullity of the deed of sale. +he .+( retained the validity of the deed of sale. +he (ourt of Appeals reversed the .+(. +he (A ruled that the sale is void for it is a pactum commissorium sale which is prohi#ited under Art. >?88 of the (ivil (ode (note the disparity of the purchase price, which is the loan amount, with the actual value of the property which is after all located in a su#division). 1ssue5 6hether or not the case filed #y /elicidad shall prosper.

7eld5 =o. 3nfortunately, the civil case was filed not against the real party in interest. As pointed out #y Aguila, he is not the real party in interest #ut rather it was the partnership A.(. Aguila R 2ons, (o. +he .ules of (ourt provide that Hevery action must #e prosecuted and defended in the name of the real party in interest.) A real party in interest is one who would #e #enefited or in*ured #y the *udgment, or who is entitled to the avails of the suit. Any decision rendered against a person who is not a real party in interest in the case cannot #e e$ecuted. 7ence, a complaint filed against such a person should #e dismissed for failure to state a cause of action, as in the case at #ar. 3nder Art. 10"8 of the (ivil (ode, a partnership Hhas a *uridical personality separate and distinct from that of each of the partners.) +he partners cannot #e held lia#le for the o#ligations of the partnership unless it is shown that the legal fiction of a different *uridical personality is #eing used for fraudulent, unfair, or illegal purposes. 1n this case, /elicidad has not shown that A.(. Aguila R 2ons, (o., as a separate *uridical entity, is #eing used for fraudulent, unfair, or illegal purposes. ;oreover, the title to the su#*ect property is in the name of A.(. Aguila R 2ons, (o. 1t is the partnership, not its officers or agents, which should #e impleaded in any litigation involving property registered in its name. A violation of this rule will result in the dismissal of the complaint. 2unga v (hua K (ary (include the discussion on if capital at least '@???) <... =o. 1!@@!? August 1D, >??1 8181G4+7 23=<A-(7A= and (4(181A 23=<A, petitioners, vs. 8A;G4.+A +. (73A, respondent. <A=IA<A-.4J42, J.5 /acts5 8am#erto +. (hua filed a complaint against 8ili#eth 2unga (han and (ecilia 2unga, daughter and wife, respectively of the deceased Jacinto 8. 2unga, for %6inding 3p of 'artnership Affairs, Accounting, Appraisal and .ecovery of 2hares and -amages with 6rit of 'reliminary Attachment% with the .egional +rial (ourt. .espondent alleged that he ver#ally entered into a partnership with Jacinto in the distri#ution of 2hellane 8iFuefied 'etroleum <as in ;anila. /or #usiness convenience, respondent and Jacinto allegedly agreed to register the #usiness name of their partnership, 274881+4 <A2 A''81A=(4 (4=+4., under the name of Jacinto as a sole proprietorship. .espondent allegedly delivered his initial capital contri#ution of '1??,???.?? to Jacinto while the latter in turn produced '1??,???.?? as his counterpart contri#ution, with the intention that the profits would #e eFually divided #etween them. 3pon JacintoCs death, his surviving wife, petitioner (ecilia and particularly his daughter,

petitioner 8ili#eth, too& over the operations, control, custody, disposition and management of 2hellite without respondentCs consent. -espite respondentCs repeated demands upon petitioners for accounting, inventory, appraisal, winding up and restitution of his net shares in the partnership, petitioners failed to comply. 'etitioners Fuestion the correctness of the finding of the trial court and the (ourt of Appeals that a partnership e$isted #etween respondent and Jacinto from 1 00 until JacintoCs death. 1n the a#sence of any written document to show such partnership #etween respondent and Jacinto, petitioners argues that these courts were proscri#es from hearing the testimonies of respondent and his witness, Josephine, to prove the alleged partnership three years after JacintoCs death. +o support this argument, petitioners invo&e the %-ead ;anCs 2tatuteC or %2urvivorship .ule% under 2ection >@, .ule 1@? of the .ules of (ourt. 'etitioners thus implore this (ourt to rule that the testimonies of respondent and his alter ego, Josephine, should not have #een admitted to prove certain claims against a deceased person (Jacinto), now represented #y petitioners. 1ssue5 6hether a partnership was formed. 7eld5 3e are not pers aded5 A partnership may #e constituted in any form, e$cept where immova#le property of real rights are contri#uted thereto, in which case a pu#lic instrument shall necessary. 7ence, #ased on the intention of the parties, as gathered from the facts and ascertained from their language and conduct, a ver#al contract of partnership may arise. +he essential profits that must #e proven to that a partnership was agreed upon are (1) mutual contri#ution to a common stoc&, and (>) a *oint interest in the profits. 3nderstanda#ly so, in view of the a#sence of the written contract of partnership #etween respondent and Jacinto, respondent resorted to the introduction of documentary and testimonial evidence to prove said partnership. +he crucial issue to settle then is to whether or not the %-ead ;anCs 2tatute% applies to this case so as to render inadmissi#le respondentCs testimony and that of his witness, Josephine. +wo reasons forestall the application of the %-ead ;anCs 2tatute% to this case /irst, petitioners filed a compulsory counterclaim against respondents in their answer #efore the trial court, and with the filing of their counterclaim, petitioners themselves effectively removed this case from the am#it of the %-ead ;anCs 2tatute%. 6ell entrenched is the rule that when it is the e$ecutor or administrator or representatives of the estates that sets up the counterclaim, the plaintiff, herein respondent, may testify to occurrences #efore the death of the deceased to defeat the counterclaim. ;oreover, as defendant in the counterclaim, respondent is not disFualified from testifying as to matters of facts occurring #efore the death of the deceased, said action not having #een #rought against #ut #y the estate or representatives of the deceased. 2econd, the testimony of Josephine is not covered #y the %-ead ;anCs 2tatute% for the

simple reason that she is not %a party or assignor of a party to a case or persons in whose #ehalf a case is prosecuted.% .ecords show that respondent offered the testimony of Josephine to esta#lish the e$istence of the partnership #etween respondent and Jacinto. 'etitionersC insistence that Josephine is the alter ego of respondent does not ma&e her an assignor #ecause the term %assignor% of a party means %assignor of a cause of action which has arisen, and not the assignor of a right assigned #efore any cause of action has arisen.% 'lainly then, Josephine is merely a witness of respondent, the latter #eing the party plaintiff. 'etitionersC reliance alone on the %-ead ;anCs 2tatute% to defeat respondentCs claim cannot prevail over the factual findings of the trial court and the (ourt of Appeals that a partnership was esta#lished #etween respondent and Jacinto. Gased not only on the testimonial evidence, #ut the documentary evidence as well, the trial court and the (ourt of Appeals considered the evidence for respondent as sufficient to prove the formation of partnership, al#eit an informal one. 1n a desperate #id to cast dou#t on the validity of the oral partnership #etween respondent and Jacinto, petitioners maintain that said partnership that had initial capital of '>??,???.?? should have #een registered with the 2ecurities and 4$change (ommission (24() since registration is mandated #y the (ivil (ode, +rue, Article 100> of the (ivil (ode reFuires that partnerships with a capital of '@,???.?? or more must register with the 24(, however, this registration reFuirement is not mandatory. Article 10"8 of the (ivil (ode e$plicitly provides that the partnership retains its *uridical personality even if it fails to register. +he failure to register the contract of partnership does not invalidate the same as among the partners, so long as the contract has the essential reFuisites, #ecause the main purpose of registration is to give notice to third parties, and it can #e assumed that the mem#ers themselves &new of the contents of their contract. 1n the case at #ar, 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 Fuestion.

Ca;pos R eda 1 Co v Pa"i<i" Co;;er"ial ?'' Phil 87J@ /acts5 (ampos, .ueda R (o., a limited partnership, is inde#ted to the appellants5 'acific (ommercial (o. , Asiatic 'etroleum (o, and 1nternational Gan&ing (orporation amounting to not less than '1,???.?? (which were not paid more than @? days prior to the date of the filing #y petitioners of the application for voluntary insolvency). +he trial court denied their petition on the ground that it was not proven, nor alleged, that the mem#ers of the firm were insolvent at the time the application was filed. 1t also held that the partners are personally and solidarily lia#le for the conseFuences of the transactions of the partnership. 1ssue5 6hether or not a limited partnership may #e held to have committed an act of

insolvency. 7eld5 Jes. A limited partnership,s *uridical personality is different from the personality of its mem#ers. An general principle, the limited partnership must answer for and suffer the conseFuence of its acts. 3nder our 1nsolvency 8aw, one of the acts of #an&ruptcy upon wMc an ad*udication of involuntary insolvency can #e predicated is the failure to pay o#ligations. +he failure of (ampos, .ueda R (o., to pay its o#ligations constitutes an act wMc is specifically provided for in the 1nsolvency 8aw for declaration of involuntary insolvency. +he petitioners have a right to a *udicial decree declaring the involuntary insolvency of said partnership. (8A2242 A=- V1=-2 A/ 'A.+=4.271' CIR v S ter K 'at /A(+25 A limited partnership named 6illiam J. 2uter C;orcoinC (o., 8td was formed @?2eptem#er 1 !0 #y 6illiam J. 2uter as the general partner, and Julia 2pirig and <ustav (arlson. +hey contri#uted, respectively, '>?,???.??, '18,???.?? and'>,???.??. it was also duly registered with the 24(. An 1 !8 2uter and 2pirig got married and in effect (arlson sold his share to the couple, the same was also registered with the 24(. +he limited partnership had #een filing its income ta$ returns as a corporation, without o#*ection #y the herein petitioner, (ommissioner of 1nternal .evenue, until in 1 D when the latter, in an assessment, consolidated the income of the firm and the individual incomes of the partners-spouses 2uter and 2pirig resulting in a determination of a deficiency income ta$ against respondent 2uter in the amount of '>,"08.?" for 1 D! and '!,D"0.?? for 1 DD. 1223456hether or not the limited partnership has #een dissolved after the marriage of 2uter and 2pirig and #uying the interest of limited partner (arlson. .381=<5 =o, the limited partnership was not dissolved. HA hus#and and a wife may not enter into a contract of general copartnership, #ecause under the (ivil (ode, which applies in the a#sence of e$press provision in the (ode of (ommerce, persons prohi#ited from ma&ing donations to each other are prohi#ited from entering into universal partnerships. (>4chaverri 1 ") 1t follows that the marriage of partners necessarily #rings a#out the dissolution of a pre-e$isting partnership. H6hat the law prohi#its was when the spouses entered into a general partnership. 1n the case at #ar, the partnership was limited.

+an v -el .osario K Jen +%CTRINE, ?see notes &eloG@ NAT-RE5 (onsolidated case. +wo special civil actions for prohi#ition P%NENTE5 Bitug, J. /ACTS, W +his is a consolidated case involving the constitutionality of .A 0! " or the Si;pli<ied Net In"o;e Taxation (2=1+) scheme. W 'etitioners claim to #e ta$payers adversely affected #y the continued implementation of the 2=1+. W In the 7st "ase( they contended that the 7ouse Gill which eventually #ecame .A 0! " is a misnomer or deficient #ecause it was named as H2implified =et 1ncome +a$ation 2cheme for the 2elf-L4mployed and 'rofessionals 4ngaged in the 'ractice of their 'rofession) while the actual title contains the said words with the additional phrase, HXAmending 2ection >1 and > of the =ational 1nternal .evenue (ode.) W +hey alleged that this title was in direct violation of 2ection >" (1) and >8 (1) in Article B1 of the 1 80 (onstitution. +he petitioner also stressed that it violates the eFual protection clause as it only imposed ta$es upon one who practice his profession alone and not to those who are engaged to single proprietorship. W In the )nd "ase( they argued that respondents have ex"eeded their r le#. ;a6ing a thorit! in appl!ing SNIT to general pro<essional partnerships #y issuing .evenue .egulation >-L @ to carry out the .A. +his is anchored on the administrative interpretation of pu#lic respondents that would apply 2=1+ topartners in general professional partnerships.-L W 'etitioners cited the deli#erations in the 7A. regarding the implementation of the said rule in which it was shown that framers did not intend for the #ill to #e applica#le to #usiness corporations or partnerships ISS-E, 1. 6A= .A 0! " is unconstitutional (<... =o. 1? >8 ). N%

)5 3%N in RA :'8J( the SNIT applies to partners in general pro<essional partnerships5 ?G5R5 No5 7*8''J@5 YES HE0+, 1. (onstitutionality of .A 0! " o +he 2( ruled in the negative. +he said law is not ar#itrary9 it is germane to the purpose of the law and9 applies to all things of eFual conditions and of same class.

o 1t is neither violative of eFual protection clause due to the e$istence of su#stantial difference #etween one who practice his profession alone and one who is engaged to proprietorship. o /urther, the 2( said that .A 0! " is *ust an amendatory provision of the code of ta$payers where it classifies ta$payers in to four main groups5 1ndividuals, (orporations, 4state under Judicial 2ettlement and 1rrevoca#le +rust. o +he court would have appreciated the contention of the petitioner if .A 0! " was an independent law. Gut since it is attached to a law that has already classified ta$payers, there is no violation of eFual protection clause. )5 Appli"ation o< SNIT to partners in general pro<essional partnerships

o +here is no distinction in income ta$ lia#ility #etween a person who practices his profession alone or individually and one who does it through a partnership (whether registered or not) with others in the e$ercise of a common profession. o 3nder the present income ta$ system, all individuals deriving income from any source whatsoever are treated in almost invaria#ly the same manner and under a common set of rules. o Although the general professional partnership is e$empt from the payment of ta$es (#ut it still has an o#ligation to file an income ta$ return mainly for administration and data), the partners themselves are lia#le for the payment of income ta$ in their individual capacity computed on their respective and distri#utive shares of profits. N%TES, -ifferences #etween general professional partnerships and ordinary #usiness partnerships5 a. A general pro<essional partnership7 , unli&e an ordinar! & siness partnership ?Ghi"h is treated as a "orporation <or in"o;e tax p rposes and so s &Fe"t to the "orporate in"o;e tax), is not itself an income ta$payer. The in"o;e tax is i;posed not on the pro<essional partnership( Ghi"h is tax exe;pt( & t on the partners the;selves in their individ al "apa"it! computed on their distri#utive shares of partnership profits. #. Ardinary #usiness partnerships, no matter how created or organi:ed, are Mtaxa&le partnerships.) <eneral professional partnerships are Hexe;pt partnerships.) 3nder the +a$ (ode on income ta$ation, the general professional partnership is deemed to #e no more than a mere mechanism or a flow-Lthrough entity in the generation of income #y, and the ultimate distri#ution of such income to, respectively, each of the individual partners. +ISP%SITI4E, 674.4/A.4, the petitions are -12;1224-. =o special pronouncement on costs. 4%TING, 1arvasa, C.J., Cru , 2e"iciano, 3ega"ado, Davide, Jr., 3omero, 'e""osi""o, 4e"o, 5uiason, Puno, Kapunan and 4endo a, JJ., concur.

Padi""a and 'idin, JJ., are on leave. Artega v (A K (iv V1=-2 A/ 'A.+=4.2 (.4A+1A= A=- -3.A+1A= +ocao v (A K *en 2unga v (hua K (ary <... =o. 1!@@!? August 1D, >??1 8181G4+7 23=<A-(7A= and (4(181A 23=<A, petitioners, vs. 8A;G4.+A +. (73A, respondent. <A=IA<A-.4J42, J.5 /acts5 8am#erto +. (hua filed a complaint against 8ili#eth 2unga (han and (ecilia 2unga, daughter and wife, respectively of the deceased Jacinto 8. 2unga, for %6inding 3p of 'artnership Affairs, Accounting, Appraisal and .ecovery of 2hares and -amages with 6rit of 'reliminary Attachment% with the .egional +rial (ourt. .espondent alleged that he ver#ally entered into a partnership with Jacinto in the distri#ution of 2hellane 8iFuefied 'etroleum <as in ;anila. /or #usiness convenience, respondent and Jacinto allegedly agreed to register the #usiness name of their partnership, 274881+4 <A2 A''81A=(4 (4=+4., under the name of Jacinto as a sole proprietorship. .espondent allegedly delivered his initial capital contri#ution of '1??,???.?? to Jacinto while the latter in turn produced '1??,???.?? as his counterpart contri#ution, with the intention that the profits would #e eFually divided #etween them. 3pon JacintoCs death, his surviving wife, petitioner (ecilia and particularly his daughter, petitioner 8ili#eth, too& over the operations, control, custody, disposition and management of 2hellite without respondentCs consent. -espite respondentCs repeated demands upon petitioners for accounting, inventory, appraisal, winding up and restitution of his net shares in the partnership, petitioners failed to comply. 'etitioners Fuestion the correctness of the finding of the trial court and the (ourt of Appeals that a partnership e$isted #etween respondent and Jacinto from 1 00 until JacintoCs death. 1n the a#sence of any written document to show such partnership #etween respondent and Jacinto, petitioners argues that these courts were proscri#es from hearing the testimonies of respondent and his witness, Josephine, to prove the alleged partnership three years after JacintoCs death. +o support this argument, petitioners invo&e the %-ead ;anCs 2tatuteC or %2urvivorship .ule% under 2ection >@, .ule 1@? of the .ules of (ourt.

'etitioners thus implore this (ourt to rule that the testimonies of respondent and his alter ego, Josephine, should not have #een admitted to prove certain claims against a deceased person (Jacinto), now represented #y petitioners. 1ssue5 6hether there a partnership was formed. 7eld5 6e are not persuaded. A partnership may #e constituted in any form, e$cept where immova#le property of real rights are contri#uted thereto, in which case a pu#lic instrument shall necessary. 7ence, #ased on the intention of the parties, as gathered from the facts and ascertained from their language and conduct, a ver#al contract of partnership may arise. +he essential profits that must #e proven to that a partnership was agreed upon are (1) mutual contri#ution to a common stoc&, and (>) a *oint interest in the profits. 3nderstanda#ly so, in view of the a#sence of the written contract of partnership #etween respondent and Jacinto, respondent resorted to the introduction of documentary and testimonial evidence to prove said partnership. +he crucial issue to settle then is to whether or not the %-ead ;anCs 2tatute% applies to this case so as to render inadmissi#le respondentCs testimony and that of his witness, Josephine. +wo reasons forestall the application of the %-ead ;anCs 2tatute% to this case. /irst, petitioners filed a compulsory counterclaim against respondents in their answer #efore the trial court, and with the filing of their counterclaim, petitioners themselves effectively removed this case from the am#it of the %-ead ;anCs 2tatute%. 6ell entrenched is the rule that when it is the e$ecutor or administrator or representatives of the estates that sets up the counterclaim, the plaintiff, herein respondent, may testify to occurrences #efore the death of the deceased to defeat the counterclaim. ;oreover, as defendant in the counterclaim, respondent is not disFualified from testifying as to matters of facts occurring #efore the death of the deceased, said action not having #een #rought against #ut #y the estate or representatives of the deceased. 2econd, the testimony of Josephine is not covered #y the %-ead ;anCs 2tatute% for the simple reason that she is not %a party or assignor of a party to a case or persons in whose #ehalf a case is prosecuted.% .ecords show that respondent offered the testimony of Josephine to esta#lish the e$istence of the partnership #etween respondent and Jacinto. 'etitionersC insistence that Josephine is the alter ego of respondent does not ma&e her an assignor #ecause the term %assignor% of a party means %assignor of a cause of action which has arisen, and not the assignor of a right assigned #efore any cause of action has arisen.% 'lainly then, Josephine is merely a witness of respondent, the latter #eing the party plaintiff.

'etitionersC reliance alone on the %-ead ;anCs 2tatute% to defeat respondentCs claim cannot prevail over the factual findings of the trial court and the (ourt of Appeals that a partnership was esta#lished #etween respondent and Jacinto. Gased not only on the testimonial evidence, #ut the documentary evidence as well, the trial court and the (ourt of Appeals considered the evidence for respondent as sufficient to prove the formation of partnership, al#eit an informal one. 1n a desperate #id to cast dou#t on the validity of the oral partnership #etween respondent and Jacinto, petitioners maintain that said partnership that had initial capital of '>??,???.?? should have #een registered with the 2ecurities and 4$change (ommission (24() since registration is mandated #y the (ivil (ode, +rue, Article 100> of the (ivil (ode reFuires that partnerships with a capital of '@,???.?? or more must register with the 24(, however, this registration reFuirement is not mandatory. Article 10"8 of the (ivil (ode e$plicitly provides that the partnership retains its *uridical personality even if it fails to register. +he failure to register the contract of partnership does not invalidate the same as among the partners, so long as the contract has the essential reFuisites, #ecause the main purpose of registration is to give notice to third parties, and it can #e assumed that the mem#ers themselves &new of the contents of their contract. 1n the case at #ar, 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 Fuestion.

Agad v ;a#ato K Gianca

G5R5 No5 0#)'78A $ ne )B( 78JB MA-RICI% AGA+( plaintiff-appellant, vs. SE4ERIN% MABAT% and MABAT% and AGA+ C%MPANY( defendants-appellees. /a"ts, +he complaint alleged that the plaintiff and defendant 2everino ;a#ato are partners in a fishpond #usiness (pursuant to a pu#lic instrument - Anne$ %A%). 'laintiff filed said complaint against defendant for the alleged failure and refusal of ;a#ato to render accounts for the years 1 D0 to 1 "@. ;a#ato denied the e$istence of said partnership upon the ground that the contract therefore had not #een perfected, despite the e$ecution of Anne$ %A%, #ecause Agad had allegedly failed to give his '1,??? contri#ution to the partnership capital. +(- -ismissed case for failure to state a cause of action. Annex EAE( is n ll and void( p rs ant to Art5 7::A o< o r Civil Code( &e"a se an inventor! o< the <ishpond re<erred in said instr ;ent had not &een atta"hed thereto5

ISS-E, 6A= Art 100@ is applica#le in this caseE HE0+, =A Articles 1001 and 100@ of said (ode provide5 Art. 1001. A partnership may #e constituted in any form, e$cept where immova#le property or real rights are contri#uted thereto, in which case a pu#lic instrument shall #e necessary. Art. 100@. A contract of partnership is void, whenever immova#le property is contri#uted thereto, if inventory of said property is not made, signed #y the parties9 and attached to the pu#lic instrument. +he issue #efore us hinges on whether or not %immova#le property or real rights% have #een contributed to the partnership under consideration. 1n Anne$ %A% the partnership was esta#lished %to operate a fishpond%, not to %engage in a fishpond #usiness%. ;oreover, none of the partners contri#uted either a fishpond or a real right to any fishpond. +heir contri#utions were limited to the sum of '1,??? each. 1ndeed, 'aragraph ! of Anne$ %A% provides5 +hat the capital of the said partnership is +wo +housand ('>,???.??) 'esos 'hilippine (urrency, of which Ane +housand ('1,???.??) pesos has #een contri#uted #y 2everino ;a#ato and Ane +housand ('1,???.??) 'esos has #een contri#uted #y ;auricio Agad. $$$ $$$ $$$ +he operation of the fishpond mentioned in Anne$ %A% was the purpose of the partnership. =either said fishpond nor a real right thereto was contri#uted to the partnership or #ecame part of the capital thereof, even if a fishpond or a real right thereto could #ecome part of its assets. 674.4/A.4, we find that said Article 100@ of the (ivil (ode is not in point and that, the order appealed from should #e, as it is here#y set aside and the case remanded to the lower court for further proceedings AG81<A+1A=2 A/ 'A.+=4.2 A;A=< +74;248B42 R%$AS v MAG0ANA /ACTS, ;aglana and .o*as e$ecuted their articles of co-partnership called 4-4. 1t had an indefinite term, was registered with the 24(, and had a +imer 8icense. 8ater, Agustin 'ahamitang #ecame an industrial partner and another articles of co-partnership was e$ecuted. +he term of the second co-partnership was fi$ed to @? years. After some time, the three e$ecuted a conditional sale of interest in the partnership where

;agalana and .o*as shall purchase the interest, share, and participation of 'ahamotang. 1t was agreed that, after payment of such including the loan secured #y 'ahamotang, the two shall #ecome owners of all eFuipment contri#uted #y 'ahamotang. +he two continued the partnership without any written agreement or reconstitution of the articles of partnership. 2u#seFuently, .o*as entered into a contarct with (;2 4state. ;aglana reminded him of his contri#ution to the capital investments and his duties to the partnership. .o*as said he would not #e a#le to comply. ;aglana told .o*as that the latter is only entitled to >?% of the profits, which was the sharing from 1 D0-1 D without dispute. .o*as too& funds from the partnership which was more than his share. ;aglana notified .o*as that he had dissolved the partnership. .o*as filed an action against ;agallana. +he (/1 ruled that the partnership of the two after 'ahamotang left was one de facto and at will. +he 2( said that it was not, considering that the first partnership was never dissolved. 6ith regard to the issue of unilateral dissolution, the 2( held that ;aglana had the power to doso. ISS-E, 1. 6M= the partnership carried on after the second partnership was a de facto partnership and at will. =A )5 6M= ;agalana may unilaterally dissolve the partnership. J42 HE0+, 1. +here was no intention to dissolve the first partnership upon the constitution of the second as everything else was the same e$cept for the fact that they too& in an industrial partner5 they pursued the same purposes, the capital contri#utions call for the same amounts, all su#seFuent renewals of +im#er 8icense were secured in favor of the first partnership, all #usinesses were carried out under the registered articles. +o all intents and purposes therefore, the /irst Articles of 'artnership were only amended, in the form of 2upplementary Articles of (o-'artnership. An the other hand, there is no dispute that the second partnership was dissolved #y common consent. 2aid dissolution did not affect the first partnership which continued to e$ist. 2ignificantly, ;aglana and .o*as agreed to purchase the interest, share and participation in the second partnership of 'ahamotang and that thereafter, the two (;aglana and .o*as) #ecame the owners of eFuipment contri#uted #y 'ahamotang. ;aglana even reminded .o*as of his o#ligation to contri#ute either in cash or in eFuipment, to the capital investment of the partnership as well as his o#ligation to perform his duties as logging superintendent. +his reminder cannot refer to any other #ut to the provisions of the duly registered Articles of (o'artnership. >. As there are only two parties when ;aglana notified .o*as that he dissolved the partnership, it is in effect a notice of withdrawal. 3nder Article 18@?, par. > of the (ivil (ode, even i< there is a spe"i<ied ter;( one partner "an "a se its dissol tion &! expressl! GithdraGing even &e<ore the expiration o< the period( Gith or Githo t F sti<ia&le "a se5 Af course, if the cause is not *ustified or no cause was given, the withdrawing partner is lia#le for damages #ut in no case can he #e compelled to remain in the firm. 6ith his withdrawal, the num#er of mem#ers is decreased, hence, the

dissolution. And in whatever way he may view the situation, the conclusion is inevita#le that .o*as and ;aglana shall #e guided in the liFuidation of the partnership #y the provisions of its duly registered Articles of (o-'artnership9 that is, all profits and losses of the partnership shall #e divided %share and share ali&e% #etween the partners. Gut an accounting must first #e made and which in fact was ordered #y the trial court and accomplished #y the commissioners appointed for the purpose. According to the (ommissioners, report, .o*as is not entitled to any profits as he failed to give the amount he had underta&en to contri#ute thus, had #ecome a de#tor of the partnership. ;aglana cannot #e lia#le for damages as .o*as a#andoned the partnership thru his acts and also too& funds in an amount more than his contri#ution # San"ho v 0iHarraga Iris

+he plaintiff #rought an action for the rescission of the partnership contract #etween himself and the defendant and the reim#ursement of his investment worth D?,???php with interest at 1> per cent per annum form Acto#er 1D, 1 >?, with costs, and any other *ust and eFuita#le remedy against said defendant. +he defendant denies generally and specifically all the allegations of the complaint and as&ed for the dissolution of the partnership, and the payment to him as its manager and administrator 'D?? monthly from Acto#er 1D, 1 >? until the final dissolution with interest. +he (/1 found that the defendant had not contri#uted all the capital he had #ound himself to invest hence it demanded that the defendant liFuidate the partnership, declared it dissolved on account of the e$piration of the period for which it was constituted, and ordered the defendant, as managing partner, to proceed without delay to liFuidate it, su#mitting to the court the result of the liFuidation together with the accounts and vouchers within the period of thirty days from receipt of notice of said *udgment. +he plaintiff appealed from said decision praying for the rescission of the partnership contract #etween him and the defendant in accordance with Art. 11>!. 1ssue5 6M= plaintiff acFuired the right to demand rescission of the partnership contract according to article 11>! of the (ivil (ode. 7eld5 +he 2( ruled that owing to the defendant,s failure to pay to the partnership the whole amount which he #ound himself to pay, he #ecame inde#ted to the partnership for the remainder, with interest and any damages occasioned there#y, #ut the plaintiff did not there#y acFuire the right to demand rescission of the partnership contract according to article 11>! of the (ode. Article 11>! cannot #e applied to the case in Fuestion, #ecause it refers to the resolution of o#ligations in general, whereas articles 1"81 and 1"8> specifically refer to the contract of partnership in particular. And it is a well-&nown principle that special provisions prevail over general provisions. 7ence, 2( dismissed the appeal left the decision appealed from in full force.

'ang 8im and <alve: v 8o 2eng K (ary <... =o. 8-1"@18 Acto#er >1, 1 >1 'A=< 81; and G4=1+A <A8B4I, plaintiffs-appellees, vs. 8A 24=<, defendant-appellant. (ohn, /isher and -e6itt for appellant. =o appearance for appellees. 2+.44+, J.5 /acts5 8o 2eng and 'ang 8im, (hinese residents of the (ity of ;anila, were partners, under the firm name of 8o 2eng and (o., in the #usiness of running a distillery, &nown as %4l 'rogreso,% in the ;unicipality of 'aom#ong, in the 'rovince of Gulacan. +he land on which said distillery is located as well as the #uildings and improvements originally used in the #usiness were the property of another (hinaman, named 8o Jao, who, leased the same to the firm of 8o 2eng and (o. for the term of three years. 3pon the e$piration of this lease a new written contract, the lease was e$tended for fifteen years. =either the original contract of lease nor the agreement e$tending the same was inscri#ed in the property registry, for the reason that the estate which is the su#*ect of the lease has never at any time #een so inscri#ed. 'ang 8im sold all his interest in the distillery to his partner 8o 2eng, thus placing the latter in the position of sole owner9 8o 2hui, again acting as attorney in fact of 8o Jao, e$ecuted and ac&nowledged #efore a notary pu#lic a deed purporting to convey to 'ang 8im and another (hinaman named Genito <alve:, the entire distillery plant including the land used in connection therewith. As in case of the lease this document also was never recorded in the registry of property. +hereafter 'ang 8im and Genito <alve: demanded possession from 8o 2eng, #ut the latter refused to yield9 and the present action of unlawful detainer was thereupon initiated #y 'ang 8im and Genito <alve: 7eld5 'laintiff 'ang 8im has occupied a dou#le role in the transactions which gave rise to this litigation, namely, first, as one of the lessees9 and secondly, as one of the purchasers now see&ing to terminate the lease. +hese two positions are essentially antagonistic and incompati#le. 4very competent person is #y law #ound to maintain in all good faith the integrity of his own o#ligations9 and no less certainly is he #ound to respect the rights of any person whom he has placed in his own shoes as regards any contract

previously entered into #y himself. 6hile yet a partner in the firm of 8o 2eng and (o., 'ang 8im participated in the creation of this lease, and when he sold out his interest in that firm to 8o 2eng this operated as a transfer to 8o 2eng of 'ang 8imCs interest in the firm assets, including the lease9 and 'ang 8im cannot now #e 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. +he #ad faith of the plaintiffs in see&ing to deprive the defendant of this lease is stri&ingly revealed in the circumstance that prior to the acFuisition of this property 'ang 8im had #een partner with 8o 2eng and Genito <alve: an employee. Goth therefore had #een in relations of confidence with 8o 2eng and in that position had acFuired &nowledge of the possi#ilities of the property and possi#ly an e$perience which would have ena#led them, in case they had acFuired possession, to e$ploit the distillery with profit. An account of his status as partner in the firm of 8o 2eng and (o., 'ang 8im &new that the original lease had #een e$tended for fifteen years9 and he &new the e$tent of valua#le improvements that had #een made thereon. (ertainly, as o#served in the appellantCs #rief, it would #e shoc&ing to the moral sense if the condition of the law were found to #e such that 'ang 8im, after profiting #y the sale of his interest in a #usiness, worthless without the lease, could intervene as purchaser of the property and confiscate for his own #enefit the property which he had sold for a valua#le consideration to 8o 2eng. +he sense of *ustice recoils #efore the mere possi#ility of such eventuality. A#ove all other persons in #usiness relations, partners are reFuired to e$hi#it towards each other the highest degree of good faith. 1n fact the relation #etween partners is essentially fiduciary, each #eing considered in law, as he is in fact, the confidential agent of the other. 1t is therefore accepted as fundamental in eFuity *urisprudence that one partner cannot, to the detriment of another, apply e$clusively to his own #enefit the results of the &nowledge and information gained in the character of partner. +hus, it has #een held that if one partner o#tains in his own name and for his own #enefit the renewal of a lease on property used #y the firm, to commence at a date su#seFuent to the e$piration of the firmCs lease, the partner o#taining the renewal is held to #e a constructive trustee of the firm as to such lease. And this rule has even #een applied to a renewal ta&en in the name of one partner after the dissolution of the firm and pending its liFuidation. T ason 1 San Pedro v5 Na;ora 1 Sons ?78*A@ -on +uason R -on 2an 'edro entered into a mercantile partnership en comandita with Bives. 1t was named YZ[8uis Bives R (o. 8ater on, Bives died so the partnership was dissolved and was reorgani:ed under the name YZ[+uason R 2an 'edro.YZ\ +his partnership was in the #usiness of wood sawyers and #uilding contracts.)

+uason R 2an 'edro was only composed of the surviving partners and this partnership assumed the #usiness of the old one. Ane day, -on +uason entered into a contract with a certain -on /eliciano to construct -on /elicianoCs house. 1n their contract, it was not mentioned that it was made on #ehalf of the partnership. -on 2an 'edro ma&es this protest (with respect to delivery of the house) on #ehalf of the firm, the manager of which is -on +uason. +his action is to recover the price of the house. A#*ection was made on the right of the partnership to sue 5 wMn a partnership can maintain an action in its own #ehalf upon a contract entered into #y one of the partners in his own name. 1n the facts on record it was made to appear that5 o 'artnership owns the credit o 'artnership was in possession of the document evidencing the credit o Atty appearing for the partnership held a power of attorney from the partnership, e$ecuted #y +uason as managing partner o 4verything +uason did was done #y the 'artnership o +he action is solidary, therefore, the result is the same wMn it was #rought #y the partnership. %'ayment should #e made to the person in whose favor the o#ligation is constituted, or to some other person authori:ed to receive it in his name.% (Art. 11"> of the (ivil (ode.) =ote5 'laintiff is the partnership, defendants are the heirs of -on /eliciano. Iss e2Held, 2hould payment #e made to the partnershipE ---J42 Ratio5 (+his part is copy paste as 1 do not &now how to rephrase and sometimes do not understand old case &asi) ;anresa says5 %+he first of these cases, the most natural and simple, refers not only to the person who may have #een the creditor at the time the o#ligation was created #ut rather to the person who is the creditor at the time payment is due. . . . +hat the principle laid down #y the code has this wide meaning is demonstrated #y the fact that it has no rules, as have other codes (for instance, the Argentine code) which e$pressly authori:ed heirs, assignees, and su#rogated creditors to demand payment, and the right of these persons #eing unFuestiona#le they must #e regarded as included in the first part of Art 11">, #ecause, although the o#ligation was not created in their favor, it has su#seFuently resulted that its constitutions is to their #enefit. 6hen process was served upon the defendant to answer the complaint, it could #e seen that the plaintiff was not an heir, an assignee, or a su#rogated creditor, physically

distinct from the person who made the contract. Gut this very same person, also #ringing with him into the case the responsi#ility of a general partnership, which, far from declining to entertain the e$ceptions, set-offs, and counter claims which might #e availa#le against the original creditor, underta&es to defend against them as the original, actual, and sole creditor. 1t is evident that although +uason may have operated in his own name, it certainly was not with his own private funds. +herefore it was that this contract was communicated to the partnership which #ecame responsi#le therefor. (Art. 1@!, (ode of (ommerce.) 1n view of the understanding and agreement #etween +uason and the partnership, the responsi#ility of +uason #eing included in the responsi#ility of +uason R 2an 'edro, the lia#ility of the firm is not less than the personal lia#ility of the partner, as the partnership was a general one. +he action #rought #y the firm is simply the action in favor of the partner assumed #y the firm. 2( says the action #rought #y the partnership will lie, and the payment which may #e made to the partnership upon the circumstances stated will #e perfectly legal. +he owner, -on /eliciano, and, #y his death, his heirs, are #ound to pay all the price agreed upon to the contractor, #ecause the house #urned after the wor& terminated, and after the defendants had #ecome in default with respect to their o#ligation to receive it,% for although it is evident that the contractor has done everything incum#ent upon him for the delivery of the house, it is none the less true, as a matter of fact, that no such delivery too& place. 'etition denied. Catalan v Gat"halian K 'at /A(+25 (atalan and <atchalian are partners. +hey mortgaged two lots to -r. ;arave together with the improvements thereon to secure a credit from the latter. +he partnership failed to pay the o#ligation. +he properties were sold to -r. ;arave at a pu#lic auction. (atalan redeemed the property and he contends that title should #e cancelled and a new one must #e issued in his name. 122345 -id (atalan,s redemption of the properties ma&e him the a#solute owner of the landsE 748-5 =o. 3nder Article 18?0 of the =(( every partner #ecomes a trustee for his copartner with regard to any #enefits or profits derived from his act as a partner. (onseFuently, when (atalan redeemed the properties in Fuestion, he #ecame a trustee and held the

same in trust for his copartner <atchalian, su#*ect to his right to demand from the latter his contri#ution to the amount of redemption. 8im +anhu v .amolete K Jen 7anlon v 7aussermann and Geam K (iv Ju v =8.( - Gianca

G5R5 Nos5 777B7*#77 $ ne 7J( 7889 $AMES Y- and 3I0S%N Y%-NG( petitioners, vs. THE NATI%NA0 0AB%R RE0ATI%NS C%MMISSI%N( 0AB%R ARBITER +ANIE0 C5 C-ET%( TAN+-AY +ISTI00ERY INC5( /ERNAN+% +-RAN( E+-AR+% PA0I3AN( R%C-E EST%CE AN+ R%+RIG% SANT%S(respondents. /a"ts, 'rivate respondents-employees /ernando -uran, 4duardo 'aliwan, .oFue 4stoce, and .odrigo 2antos were employees of respondent corporation +anduay -istillery, 1nc, (+-1) who were retrenched. A complaint was filed #y private respondents against +-1 and petitioners Ju and Joung %doing #usiness under the name and style of +anduay -istillers%. 8A - declared that the retrenchment is illegal there#y ordering respondent +anduay -istillery, 1nc., to reinstate the complainants to their former position with #ac&wages up to the time of change of ownership, if one has ta&en place. =8.( K affirmed 8A A 6rit of 4$ecution #e was against +anduay -istiller, 1nc., 6ilson Joung and James Ju to immediately reinstate complainants /ernando -uran, .odrigo 2antos, .oFue 4stoce and 4duardo -aliwan to their respective positions. 'etitioners oppose a motion for e$ecution on the ground that %the ;otion for 4$ecution is without any #asis in so far as it prays for the issuance of a writ of e$ecution against respondent +anduay -istillers, which is an entity separate and distinct from respondent +anduay -istillery, 1nc., and respondents James Ju and 6ilson Joung.% ISS-E, 6A= respondent =8.( committed grave a#use of discretion in holding petitioners Ju and Joung lia#leE HE0+, J42 +he 8A,s decision does not in any manner o#ligate +anduay -istillers, or even petitioners Ju and Joung for that matter, to reinstate respondents. Anly +-1 was held lia#le to reinstate respondents up to the time of change of ownership, and for separation #enefits.

8A went #eyond what was disposed #y the decision and issued an order which reFuired . . . +anduay -istillers, 1nc., 6ilson Joung and James Ju to immediately reinstate complainants /ernando -uran, .odrigo 2antos, .oFue 4stoce and 4duardo -aliwan to heir respective positions. +he order of e$ecution and the writ of e$ecution ordering petitioners and +anduay -istillers to reinstate private respondents employees are, therefore, null and void. 674.4/A.4, the petition is here#y <.A=+4-, +he Fuestioned Arder of the 8a#or Ar#iter -aniel (. (ueto dated =ovem#er 10, 1 > and the decision of the =ational 8a#or .elations (ommission upholding said order are set aside as null and void. '.A'4.+J .1<7+2 A/ A 'A.+=4. 8o:ana v -epa&a&i#o - 1an <... =o. 8-1@"8? M 1?0 'hil 0>8 ;auro 8o:ana, plaintiff-appellee vs. 2erafin -epa&a&i#o, defendant-appellant /acts5 1) ;auro 8o:ana esta#lished a partnership with 2erafin -epa&a&i#o, wherein ;auro contri#uted "?% and 2erafin !?% of the @?& capital, for the purpose of maintaining, operating and distri#uting electric light and power in the ;unicipality of -umagas, 1loilo., under a franchise owned #y 'iadosa Geunaflor. 2aid franchise was revo&ed and cancelled, #ut a new franchise was issued in the name of Alimpia -ecolongon. >) -ue to the cancellation of 'iadosa,s franchise, ;auro sold a Guda diesel generator to Alimpia, while 2erafin sold a (rossly diesel engine to /eli$ and /elina 7arder. @) ;auro filed a case against 2erafin, alleging that he was the owner of the Guda generator, valued at 8&, and 0? wooden opsts with wires, which supplised electric current in the ;unicipality, and that #eing entitled to possession thereof, further alleged that 2erafin wrongfully detained them, with ;auro suffering damages. 7e prayed that the properties #e delivered #ac& to him. After three days, Judge 'elayo issued an order authori:ing the sheriff to ta&e possession of the properties, upon ;auro,s filing of a 1"& #ond in favor of the defendant. !) 2erafin filed an answer denying that the items #elonged to ;auro, #ut were contri#uted #y the latter to the partnership. 7e further alleged that ;auro already sold his contri#ution to the partnership, in violation of the terms of their agreement. 7e prayed that the complaint #e dismissed. D) +he lower court found that a) ;auro and 2erafin entered into a contract of partnership, #) ;auro contri#uted 18&, @) (ertificate of 'u#lic (onvenience and =ecessity necessary to own and operate a distri#ution of electricity to the ;unicipality

was revo&ed and cancelled, !) ;auro sold properties #rought #y him to the said partnership in favor of Alimpia for 1?&, D) =o liFuidation of the partnership at the time of said sale occurred, while 2erafin was the manager, ") 'roperties sold were ta&en #y the provincial sheriff, and delivered to plaintiff, 0) 'roperties sold are now in the possession of Alimpia, 8) 2erafin sold certain properties in favor of the 7arder spouses, those which were contri#uted #y him into the partnership for @.D&. ") 8ower court declared that the contract of partnership was null and void, since the parties had #ecome dummies of the owner of the franchise. 1ssue5 674+74. A. =A+ ;A3.A B1A8A+4- +74 (A=+.A(+ A/ 'A.+=4.271' 7eld5 Jes H6nder the circumstances, therefore, the court erred in dec"aring that the contract #as i""ega" from the beginning and that parties to the partnership are not bound therefor, such that the contribution of the p"aintiff to the partnership did not pass to it as its property.) +he partnership was not null and void. Admission #y 2erafin as them #eing dummies was only an error of law, not a statement of fact. +he partnership #eing valid, ;auro,s unilateral disposal of the property he contri#uted constituted a #reach of the partnership contract, since 2erafin effectively #ecame a co-owner of the property contri#uted #y ;auro. ;auro cannot unilaterally dispose even the property he contri#uted as it was already property of the partnership, and 2erafin acFuired rights to the same property. Gefore ;auro can dispose the property, he must acFuire the consent of 2erafin. .ealu#it v Jaso - 1an (supra) 1ssue5 674+74. A. =A+ +74.4 6A2 A BA81- A221<=;4=+ A/ .1<7+2 +A +74 JA1=+ B4=+3.4 7eld5 'etition is #ereft of merit. Art5 7B7A, A "onve!an"e &! a partner o< his Ghole interest in the partnership does not itsel< dissolve the partnership( or( as against the other partners in the a&sen"e o< agree;ent( entitle the assignee( d ring the "ontin an"e o< the partnership( to inter<ere in the ;anage;ent or ad;inistration o< the partnership & siness or a<<airs( or to re> ire an! in<or;ation or a""o nt o< partnership transa"tions( or to inspe"t the partnership &oo6sO & t ;erel! entitles the assignee to re"eive in a""ordan"e Gith his "ontra"ts the pro<its to Ghi"h the assigning partners Go ld otherGise &e entitled5 HoGever( in "ase o< <ra d in the ;anage;ent o< the partnership( the assignee ;a! avail hi;sel< o< the s al re;edies5 In the "ase o< a dissol tion o< the partnership( the assignee is entitled to re"eive

his assignor=s interest and ;a! re> ire an a""o nt <ro; the date onl! o< the last a""o nt agreed to &! all the partners5 1t was evident from a reading of Art. 181@ previously mentioned that transfer of a partner of his partnership interest does not ma&e the assignee of such interest a partner of the firm, nor entitle him to interfere in the management of the partnership, or receive anything #ut the assignee,s profits. +his does not purport to transfer an interest in the partnership, #ut only a future contingent right in the capital. 2pouses Jaso are entitled to Giondo,s share in the profits, despite Juanita,s lac& of consent. 4den Jaso did not #ecome a partner as a conseFuence of the assignment, nor did she acFuire the right to reFuire an accounting of the #usiness 8itton v 7ill R (eron - 8eandro /acts5 ] 8itton sold and delivered to (eron, one of the managing partners of 7ill R (eron, a certain num#er of mining claims. ]Gy virtue of said transaction, (eron delivered to plaintiff a document (receipt) ac&nowledging that he received from 8itton certain share certificates of Gig 6edge ;ining (ompany totaling '180?. ](eron paid to 8itton '1,1D? leaving a #alance of '0>? ]8itton was una#le to collect the unpaid #alance from 7ill R (eron or from its surety ]8itton filed a complaint against the defendants for the recovery of the #alance ]+he court ordered (eron to personally pay the amount claimed and a#solved the partnership, 7ill and the surety. ](A affirmed the decision of the court. 1ssue5-id the transaction #ind the partnership or (eron onlyE 7eld5 6hile the transaction was entered into #y (eron, it #ound the partnership. .o#ert 7ill had the same power to #uy and sell9 that in said partnership 7ill as well as (eron made the transaction as partners in eFual parts9 that on the date of the transaction, /e#ruary 1!, 1 @!, the partnership #etween 7ill and (eron was in e$istence. After this date, or on /e#ruary 1 th, 7ill R (eron sold shares of the Gig 6edge9 and when the transaction was entered into with 8itton, it was neither pu#lished in the newspapers nor stated inthe commercial registry that the partnership 7ill R (eron had #een dissolved. +he 2( dissented from the view of the (A that for one of the partners to #ind the partnership the consent of the other is necessary. +hird persons li&e the plaintiff, are not #ound in entering into a contract with any of the two partners, to ascertain whether or not this partner with whom the transaction is made has the consent of the other partner. +he pu#lic need not ma&e inFuires as to the agreements had #etween the partners. 1ts &nowledge, is enough that it is contracting with the partnership which is represented #y one of the managing partners. +he second paragraph of the articles of partnership of 7ill R (eron reads in part5 2econd5 +hat the purpose or o#*ect for which this co-

partnership is organi:ed is to engage in the #usiness of #ro&erage in general,such as stoc& and #ond #ro&ers, real #ro&ers, investment security #ro&ers, shipping #ro&ers, and other activities pertaining to the #usiness of #ro&ers in general. +he &ind of #usiness in which the partnership 7ill R (eron is to engage #eing thus determined, none of the two partners, under article 1@? of the (ode of (ommerce, may legally engage in the #usiness of #ro&erage in general as stoc& #ro&ers, security #ro&ers and other activities pertaining to the #usiness of the partnership. (eron, therefore, could not have entered into the contract of sale of shares with 8itton as a private individual, #ut asa managing partner of 7ill R (eron +he stipulation in the articles of partnership that any of the two managing partners may contract and sign in the name of the partnership with the consent of the other, undou#tedly creates an o#ligation #etween the two partners, which consists in as&ing the otherCs consent #efore contracting for the partnership. +his o#ligation of course is not imposed upon a third person who contracts with the partnership. =either is it necessary for the third person to ascertain if the managing partner with whom he contracts has previously o#tained the consent of the other. A third person may and has a right to presume that the partner with whom he contracts has, in the ordinary and natural course of #usiness, the consent of his copartner9 for otherwise he would not enter into the contract. +he third person would naturally not presume that the partner with whom he enters into the transaction is violating the articles of partnership #ut, on the contrary, acting in accordance therewith. And this finds support in the legalpresumption that the ordinary course of #usiness has #een followed. 1f we are to interpret the articles of partnership in Fuestion #y holding that it is the o#ligation of the third person to inFuire whether the managing copartner of the one with whom he contracts has given his consent to said contract, which is practically casting upon him the o#ligation to get such consent, this interpretation would, in similar cases, operate to hindereffectively the transactions, a thing not desira#le and contrary to the nature of #usiness which reFuires promptness and dispatch one the #asis of good faith and honesty which are always presumed. 2mith, Gell R (o v A:nar - 8eandro /acts5 'laintiff is the 'hilippine corporation and the office is on the (ity of ;anila. ;7 A:nar and company was the registered commercial partnership and the principal office is on the (ity of ;anila. +he partnership was composed of ;atias A:nar as capitalist partner and 4ufrone +o#es as industrial partner. +o#es was the manager of the partnership. 1ssue5 6hether or not +o#es represent partnershipE Article 18?> K 1n case it should have #een stipulated that none of the managing partners shall act without the consent of the others, the concurrence of all shall #e necessary for the validity of the acts, and the a#sence or disa#ility of any one of them cannot #e alleged, unless there is imminent danger of grave or irrepara#le in*ury to the partnership.

1n this article, it is clearly stipulated that any partner cannot engage in any transactions without the consent of the remaining partners. /or e$ample, if A, G, ( and - are managing partners in AG(- partnership, if A will engage into transaction without the &nowledge of the remaining partners, the said contract will #e invalid since A did not have a consent from the remaining partners. Gut there is opposition of this article, which states that5 (onsent of remaining partners not necessary in routine matters. +his statement is applica#le only if the said partner who will do transactions will #e for the daily #usiness operation and for the purpose of the #usiness operation. +he said partner will transact in the name of the firm since heMshe is acting within hisMher implied powers, and it is the usual operation, and the person dealing with a firm have a right to assume that the authority of the partner is coe$tensive with the #usiness transacted #y hisMher firm. ;oreover, third persons are not as a rule #ound to inFuire on the partnership account or for hisMher individual advantage. Pardo vs5 Her" les 0 ;&er Co;pan! /a"ts, Antonio 'ardo (petitioner), a stoc&holder in the 7ercules 8um#er (ompany, 1nc., was refused #y 7ercules 8um#er (ompany, 1nc. to permit 'ardo or his agent to inspect the records and #usiness transactions of the said company. .espondent company contends that right of inspection may #e e$ercised as reference to time, or times as mentioned in the #y-laws of the corporation. 1t declared that %4very shareholder may e$amine the #oo&s of the company and other documents pertaining to the same upon the days which the #oard of directors shall annually fi$.% +he Goard declared via its resolution constitutes a lawful restriction on the right conferred #y statute9 and it is insisted that as the petitioner has not availed himself of the permission to inspect the #oo&s and transactions of the company within the ten days thus defined, his right to inspection and e$amination is lost, at least for this year. +he (ourt disagrees with respondent. Iss e, 6hether 'ardo has right to inspect records of said companyE YES R ling, +he general right given #y the statute may not #e lawfully a#ridged to the e$tent attempted in this resolution. 1t may #e admitted that the officials in charge of a corporation may deny inspection when sought at unusual hours or under other improper conditions9 but neither the executive officers nor the board of directors have the power to deprive a stockholder of the right altogether. A #y-law unduly restricting the right of inspection is undou#tedly invalid. Authorities to this effect are too numerous and direct to reFuire e$tended comment. (1! (.J., 8D 9 0 ..(.8., @>D9 ! +hompson on (orporations, >nd ed., sec. !D109 7ar&ness vs. <uthrie, >0 3tah, >!89 1?0 Am., 2t. .ep., ""!. "81.) 3nder a statute similar to our own it has #een held that the statutory

right of inspection is not affected #y the adoption #y the #oard of directors of a resolution providing for the closing of transfer #oo&s thirty days #efore an election. (2tate vs. 2t. 8ouis .ailroad (o., > ;o., Ap., @?1.) 1t will #e noted that our statute declares that the right of inspection can #e e$ercised %at reasona#le hours.% +his means at reasona#le hours on #usiness days throughout the year, and not merely during some ar#itrary period of a few days chosen #y the directors. Garrido v5 Asen"io /a"ts, 'laintiff and defendant formed a partnership under the firm name Asencio y (ia. 7owever, the #usiness did not prosper and was later dissolved as mutually agreed #y the parties. <arrido now wants to recover from Asencio (who was then in charge of the #oo&s) the capital he had invested in the partnership. +his was denied #y Asencio contending that there was considra#le losses in the conduct of the #usiness and nothing was due to <arrido. .espondent in turn filed a cross-claim against <arrido. +rial court ruled in favor of Asencio. Iss e, 6hether or not estado de cuentas (statement of account) of the partnership of Asencio y (ia as evidence of th e record proved the e$istence of losses in the said partnershipE YES R ling, 1t appears from the record that #y mutual agreement the defendant had general charge and supervision of the #oo&s and funds of the firm, #ut it appears that these #oo&s were at all times open to the inspection of the plaintiff, and there is evidence which tends to show that the plaintiff himself made entries in these #oo&s touching particular transactions in which he happened to #e interested9 so that while it is clear that the defendant was more especially burdened with the care of the books and accounts of the partnership, it would appear that the plaintiff had equal rights with the defendant in this regard, and that during the existence of the partnership they were equally responsible for the mode in which the books were kept and that the entries made by one had the same effect as if they had been made by the other. 1t is not necessary for us to consider this assignment of error as to the inadmissi#ility of this account on the ground that the #oo&s were not &ept in accordance with the provisions of the (ommercial (ode, #ecause no o#*ection was made to its admission in the court #elow9 and further, #ecause in any event it was admissi#le under the provisions of section @@8 of the (ode of (ivil 'rocedure as memorandum used to refresh the memory of the witness. (+an ;achan vs. <an Aya, @ 'hil. .ep., "8!.) 6e thin& further that in view of the testimony of record that the plaintiff *ointly with the defendant &ept these #oo&s, made entries therein, and was responsi#le with him therefor, the doctrine laid down in Gehn, ;eyer R (o., vs. .osat:in (D 'hil. .ep., ""?) is applica#le in this case, and the correctness of the entries in these #oo&s must #e ta&en

to #e admitted #y him, e$cept so far as it is made to appear that they are erroneous as a result of fraud or mista&e. B111. A#ligations of 'artners with +hird 'ersons 1n re 2ycip 2ala:ar - +ats '4+1+1A= /A. A3+7A.1+J +A (A=+1=34 324 A/ +74 /1.; =A;4 H2J(1', 2A8AIA., /481(1A=A, 74.=A=-4I R (A2+188A.) July @?, 1 0

/acts5 'etitions were filed #y the surviving partners of Atty. Ale$ander 2ycip, who died on ;ay D, 1 0D and #y the surviving partners of Atty. 7erminio A:aeta, who died on /e#ruary 1!, 1 0", praying that they #e allowed to continue using, in the names of their firms, the names of partners who had passed away. 'etitioners contend that the continued use of the name of a deceased or former partner when permissi#le #y local custom, is not unethical #ut care should #e ta&en that no imposition or deception is practiced through this use. +hey also contend that no local custom prohi#its the continued use of a deceased partner,s name in a professional firm,s name9 there is no custom or usage in the 'hilippines, or at least in the <reater ;anila Area, which recogni:es that the name of a law firm necessarily identifies the individual mem#ers of the firm.

1ssue5 6M= the surviving partners may #e allowed #y the court to retain the name of the partners who already passed away in the name of the firmE =A

7eld5 1n the case of .egister of -eeds of ;anila vs. (hina Gan&ing (orporation, the 2( said5

+he (ourt #elieves that, in view of the personal and confidential nature of the relations #etween attorney and client, and the high standards demanded in the canons of professional ethics, no practice should #e allowed which even in a remote degree could give rise to the possi#ility of deception. 2aid attorneys are accordingly advised to drop the names of the deceased partners from their firm name.

+he pu#lic relations value of the use of an old firm name can tend to create undue advantages and disadvantages in the practice of the profession. An a#le lawyer without connections will have to ma&e a name for himself starting from scratch. Another a#le lawyer, who can *oin an old firm, can initially ride on that old firm,s reputation esta#lished #y deceased partners. +he court also made the difference from the law firms and #usiness corporations5 A partnership for the practice of law is not a legal entity. 1t is a mere relationship or association for a particular purpose. X 1t is not a partnership formed for the purpose of carrying on trade or #usiness or of holding property.) 11 +hus, it has #een stated that Hthe use of a nom de plume, assumed or trade name in law practice is improper. 6e find such proof of the e$istence of a local custom, and of the elements reFuisite to constitute the same, wanting herein. ;erely #ecause something is done as a matter of practice does not mean that (ourts can rely on the same for purposes of ad*udication as a *uridical custom.

G. 'artners as agents <oFuioloy v 2ycip (1 "?) - Gianca G5R5 No5 0#77B'* $ l! )J( 78J* ANT%NI% C5 G%C-I%0AY and THE PARTNERSHIP ETAN SIN AN and ANT%NI% C5 G%C-I%0AY( plaintiffs-appellants, vs. 3ASHINGT%N N5 SYCIP( ET A05( defendantsappellees. ^ +an 2in An and <oFuiolay entered into a general commercial partnership under

the partnership name H+an 2in An and Antonio <oFuiolay) for the purpose of dealing in real estate. +he agreement lodged upon +an 2in An the sole management of the partnership affairs. ^ +he lifetime of the partnership was fi$ed at ten years and the Articles of (opartnership stipulated that in the event of death of any of the partners #efore the e$piration of the term, the partnership will not #e dissolved #ut will #e continued #y the heirs or assigns of the deceased partner. Gut the partnership could #e dissolved upon mutual agreement in writing of the partners. ^ <oFuiolay e$ecuted a <'A in favor of +an 2in An (allowing the latter to deal with real properties in #ehalf of the partnership.) ^ +he plaintiff partnership purchased @ parcels of land which was mortgaged to H8a 3r#ana) as payment of '>D,???. Another !" parcels of land were purchased #y +an 2in An in his individual capacity which he assumed payment of a mortgage de#t for '@DV. A down-payment and the amorti:ation were advanced #y Jutivo and (o. ^ +he two o#ligations were consolidated in an instrument e$ecuted #y the partnership and +an 2in An, where#y the entire ! lots were mortgaged in favor of HGanco 7ipotecario ) (successor of 8a 3r#ana) +an 2in An died leaving his widow, Vong (hai 'in and four minor children. +he widow su#seFuently #ecame the administratri$ of the estate. ^ .epeated demands were made #y Ganco 7ipotecario on the partnership and on +an 2in An. -efendant 2ing Jee, upon reFuest of defendant Jutivo 2ons ,paid the remaining #alance of the mortgage de#t, the mortgage was cancelled ^ Jutivo 2ons and 2ing Jee filed their claim in the intestate proceedings of +an 2in An for advances, interest and ta$es paid in amorti:ing and discharging their o#ligations to H8a 3r#ana) and HGanco 7ipotecario) ^ Vong (hai 'in filed a petition with the pro#ate court for authority to sell all the ! parcels of land. 2he then sold it to 2ycip and 8ee in consideration of '@0V and of the vendees assuming payment of the claims filed #y Jutivo 2ons and 2ing Jee. ^ 8ater, 2ycip and 8ee e$ecuted in favor of 1nsular -evelopment a deed of transfer covering the ! parcels of land. 6hen <oFuiolay learned a#out the sale to 2ycip and 8ee, he filed a petition in the intestate proceedings to set aside the order of the pro#ate court approving the sale in so far as the three (@) lots owned #y the plaintiff partnership are concerned. ^ 'ro#ate court annulled the sale e$ecuted #y the administratri$ wM respect to the "?% interest of <oFuiolay over the properties Administratri$ appealed. +he decision of pro#ate court was set aside for failure to include the indispensa#le parties. =ew

pleadings were filed ^ +he second amended complaint prays for the annulment of the sale in favor of 2ycip and 8ee and their su#seFuent conveyance to 1nsular -evelopment. 122345 1) 6A= the lower court erred in holding that Vong (hai 'in #ecame the managing partner of the partnership upon the death of her hus#andE >) 6A= the lower court erred in holding that the consent of Antonio <oFuiolay was not necessary to consummate the sale of the partnership propertiesE 748-5 1) YES5 .+( erred in holding that Vong (hai 'in, succeeded her hus#and in the sole management of the partnership, upon the latterCs death. +he provision in the articles stating that %in the event of death of any one of the partners within the 1?-year term of the partnership, the deceased partner shall #e represented #y his heirs%, does N%T in"l de the ;anagerial right given to +an 2in An9 more appropriately, it related to the succession in the proprietary interest of each partner. +he covenant that Antonio <oFuiolay shall have no voice or participation in the management of the partnership, #eing a limitation upon his right as a general partner, must #e held coe$tensive only with +anCs right to manage the affairs. 3pon the other hand, (onsonant with the articles of co-partnership providing for the continuation of the firm notwithstanding the death of one of the partners, the heirs of the deceased, #y never repudiating or refusing to #e #ound under the said provision in the articles, #ecame individua" partners with Antonio <oFuiolay upon +anCs demise. +he validity of li&e clauses in partnership agreements is e$pressly sanctioned under Article >>> of the (ode of (ommerce. Vong (hai 'in, who, #y her affirmative actions, manifested her intent to #e #ound #y the partnership agreement not only as a limited #ut as a general partner. 2he managed and retained possession of the partnership properties and was admittedly deriving income therefrom up to and until the same were sold to 6ashington 2ycip and Getty 8ee. 1n fact, #y e$ecuting the deed of sale of the parcels of land in dispute in the name of the partnership, she was acting no less than as a managing partner. 7aving thus preferred to act as such, she could #e held lia#le for the partnership de#ts and lia#ilities as a general partner, #eyond what she might have derived only from the estate of her deceased hus#and. Gy allowing her to retain control of the firmCs property from 1 !> to 1 ! , plaintiff estopped himself to deny her legal representation of the partnership, with the power to #ind it #y the proper contracts. )@ N%5 +he Fuestion now arises as to whether or not the consent of the other partners

was necessary to perfect the sale of the partnership properties to 6ashington 2ycip and Getty 8ee. +he answer is, we #elieve, in the negative. 2trangers dealing with a partnership have the right to assume, in the a#sence of restrictive clauses in the copartnership agreement, that every general partner has power to #ind the partnership, specially those partners acting with ostensi#le authority. +he latter may rightfully assume that the contracting partner was duly authori:ed to contract for and in #ehalf of the firm and that, furthermore, he would not ordinarily act to the pre*udice of his copartners. +he regular course of #usiness procedure does not reFuire that each time a third person contracts with one of the managing partners, he should inFuire as to the latterCs authority to do so, or that he should first ascertain whether or not the other partners had given their consent thereto. 1n fact, Article 1@? of the same (ode of (ommerce provides that even if a new o#ligation was contracted against the e$press will of one of the managing partners, %it shall not #e annu""ed for such reason, and it shall produce its effects without pre*udice to the responsi#ility of the mem#er or mem#ers who contracted it, for the damages they may have caused to the common fund.% Although the partnership under consideration is a commercial partnership and, therefore, to #e governed #y the (ode of (ommerce, the provisions of the old (ivil (ode may give us some light on the right of one partner to #ind the partnership. 2tates Art. 1" D thereof5 2hould no agreement have #een made with respect to the form of management, the following rules shall #e o#served5 1. All the partners shall #e considered agents, and whatever any one of the may do individually shall #ind the partnership9 #ut each one may oppose any act of the others #efore it has #ecome legally #inding. +he records fail to disclose that appellant <oFuiolay made any opposition to the sale of the partnership realty to 6ashington I. 2ycip and Getty 8ee9 on the contrary, it appears that he (<oFuiolay) only interposed his o#*ections after the deed of conveyance was e$ecuted and approved #y the pro#ate court, and, conseFuently, his opposition came too late to #e effective. Appellants assails the correctness of the amounts paid for the account of the partnership as found #y the trial court. +his Fuestion, however, need not #e resolved here, as in the deed of conveyance e$ecuted #y Vong (hai 'in, the purchasers 6ashington 2ycip and Getty 8ee assumed, as part consideration of the purchase, the full claims of the two creditors, 2ing Jee and (uan (o., 1nc. and Jutivo 2ons 7ardware (o. Appellants also Fuestion the validity of the sale covering the entire firm realty, on the ground that it, in effect, threw the partnership into dissolution, which reFuires consent of all the partners. +his view is untena#le. +hat the partnership was left without the real property it originally had will not wor& its dissolution, since the firm was not organi:ed to e$ploit these precise lots #ut to engage in #uying and selling real estate, and %in general real estate agency and #ro&erage #usiness%. 1ncidentally, it is to #e noted that the

payment of the solidary o#ligation of #oth the partnership and the late +an 2in An, leaves open the Fuestion of accounting and contri#ution #etween the co-de#tors, that should #e ventilated separately. Go> iolo! v S!"ip ?78JA@ # Iris 8 SCRA JJA +he matter now pending is the appellantCs motion for reconsideration of an earlier decision, wherein the 2( upheld the validity of the sale of the lands owned #y the partnership <oFuiolay R +an 2in An, made in 1 ! #y the widow of the managing partner, +an 2in An (4$ecuted in her dual capacity as Administratri$ of the hus#andCs estate and as partner in lieu of the hus#and), in favor of the #uyers 6ashington 2ycip and Getty 8ee for the following consideration5 <AS318AJ5 insist that, contrary to the holding, Vong (hai 'in, widow of the deceased partner +an 2in An, never #ecame more than a limited partner, incapacitated #y law to manage the affairs of partnership9 that the testimony of her witness Joung and 8im #elies that she too& over the administration of the partnership property9 and that, in any event, the sale should #e set aside #ecause it was e$ecuted with the intent to defraud appellant of his share in the properties sold. 2(5 /acts #asic and #eyond controversy5 +hat we are dealing here with the transfer of partnership property #y one partner, acting in #ehalf of the firm, to a stranger. +here is no Fuestion #etween partners inter se, and this aspect to the case was e$pressly reserved in the main decision of >" July 1 "?9 +hat partnership was e$pressly organi:ed5 %to engage in real estate #usiness, either #y buying and selling real estate%. +he Articles of co-partnership, in fact, e$pressly provided that5 1B. +he o#*ect and purpose of the co-partnership are as follows5 +o engage in real estate #usiness, either #y #uying and selling real estates9 to su#divide real estates into lots for the purpose of leasing and selling them9 +hat the properties sold were not part of the contri#uted capital (which was in cash) #ut land precisely acFuired to #e sold, although su#*ect to a mortgage in favor of the original owners, from whom the partnership had acFuired them. 3%N Iong Chai Pin ;anaged and retained possession o< the partnership properties# YES <oFuiolay himself admitted that O... ;r. Ju 4ng 8ai as&ed me if 1 could *ust let ;rs. Vong (hai 'in continue to manage the properties (as) she had no other means of income. Then I said , #ecause 1 wanted to help ;rs. Vong (hai 'in, she could *ust do it and #esides 1 am not interested in agricultural lands. I allowed her to take care of the

properties in order to help her and #ecause 1 #elieve in <od and O wanted to help her +he appellant su#seFuently ratified this testimony in his deposition, wherein he stated5 Hthat plantation was #eing occupied at that time by the widow, ;rs. +an 2in An, and of course they are receiving quiet a lot benefit from the plantation.) -iscarding the self-serving e$pressions, these admissions of <oFuiolay are certainly entitled to greater weight than those of 7ernando Joung and .ufino 8im, having #een made against the partyCs own interest. Goth Joung and 8imCs testimonies do not #elie, or contradict, <oFuiolayCs admission that he told ;r. Ju 4ng 8ai that the widow %could *ust do it% (i.e., continue to manage the properties). 6itnesses 8im and Joung referred to the period of Japanese occupation9 #ut <oFuiolayCs authority was, in fact, given to the widow in 1 !D, after the occupation. Again, the disputed sale #y the widow too& place in 1 ! . +hat Vong (hai 'in carried out no acts of management during the Japanese occupation (1 !>-1 !!) does not mean that she did not do so from 1 !D to 1 ! . <oFuiolay did not merely rely on reports from 8im and Joung9 he actually manifested his willingness that the widow should manage the partnership properties. 6hether or not she complied with this authority is a Fuestion #etween her and the appellant, and is not here involved. Gut the authority was given, and she did have it when she made the Fuestioned sale, #ecause it was never revo&ed. 3%N the a thorit! given &! Go> iola! to the GidoG Iong Chai Pin Gas onl! to ;anage the propert!( and that it did not in"l de the poGer to alienate# N% +he widow was not a mere agent, #ecause she had #ecome a partner upon her hus#andCs death, as e$pressly provided #y the articles of co-partnership. 4ven more, granting that #y succession to her hus#and, +an 2in An, the widow only #ecame a limited partner, Goquiolay s authori!ation to manage the partnership property was proof that he considered and recogni!ed her as general partner , at least since 1 !D. +he reason is plain5 3nder the law (Article 1!8, last paragraph, (ode of (ommerce), appellant could not empower the widow, if she were only a limited partner, to administer the properties of the firm, even as a mere agent5 H8imited partners may not perform any act of administration with respect to the interests of the co-partnership, not even in the capacity of agents of the managing partners.) Gy see&ing authority to manage partnership property, +an 2in AnCs widow showed that she desired to #e considered a general partner. Gy authori:ing the widow to manage partnership property (which a limited partner could not #e authori:ed to do), <oFuiolay

recogni:ed her as such partner, and is now in estoppel to deny her position as a general partner, with authority to administer and alienate partnership property. 1t must #e remem#er that the articles of co-partnership here involved e$pressly stipulated that5 H1n the event of the death of any of the partners at any time #efore the e$piration of said term, the co-partnership shall not #e dissolved #ut will have to #e continued and the deceased partner shall #e represented #y his heirs or assigns in said co-partnership (Art. _11, Articles of (o-'artnership)). +he Articles did not provide that the heirs of the deceased would #e merely limited partners9 on the contrary, they e$pressly stipulated that in case of death of either partner %the co"partnership ... will have to be continued % with the heirs or assigns. 1t is immaterial that the heirCs name was not included in the firm name, since no conversion of status is involved, and the articles of co-partnership e$pressly contemplated the admission of the partnerCs heirs into the partnership. 1t must never #e overloo&ed that this case involved the rights acFuired #y strangers, and does not deal with the rights e$isting #etween partners <oFuiolay and the widow of +an 2in An. +he issues #etween the partners inter se were e$pressly reserved in our main decision. Vnowing that law #ars a limited partner from managing the partnership #usiness or property, third parties (li&e the purchasers) who found the widow possessing and managing the firm property with the acFuiescence (or at least without apparent opposition) of the surviving partners were perfectly *ustified in assuming that she had #ecome a general partner, and, therefore, in negotiating with her as such a partner, having authority to act for, and in #ehalf of the firm. /or seven years <oFuiolay could have asserted his alleged rights, and #y suita#le notice in the commercial registry could have warned strangers that they must deal with him alone, as sole general partner. Gut he did nothing of the sort, #ecause he was not interested, and he did not even ta&e steps to pay, or settle the firm de#ts that were overdue since #efore the out#rea& of the last war. 7e did not even ta&e steps, after +an 2in An died, to cancel, or modify, the provisions of the partnership articles that he (<oFuiolay) would have no intervention in the management of the partnership. +his laches certainly contri#uted to confirm the view that the widow of +an 2in An had, or was given, authority to manage and deal with the firmCs properties apart from the presumption that a general partner dealing with partnership property has to reFuisite authority from his co-partners (8itton vs. 7ill and (eron, et al). +he stipulation in the articles of partnership that any of the two managing partners may contract and sign in the name of the partnership with the consent of the other,

undou#tedly creates on o#ligation #etween the two partners, which consists in as&ing the otherCs consent #efore contracting for the partnership. This obligation of course is not imposed upon a third person who contracts with the partnership. =either it is necessary for the third person to ascertain if the managing partner with whom he contracts has previously o#tained the consent of the other. A third person may and has a right to presume that the partner with whom he contracts has, in the ordinary and natural course of #usiness, the consent of his co" partner9 for otherwise he would not enter into the contract. +he third person would naturally not presume that the partner with whom he enters into the transaction is violating the articles of partnership, #ut on the contrary is acting in accordance therewith. And this finds support in the legal presumption that the ordinary course of #usiness has #een followed (=o. 18, section @@!, (ode of (ivil 'rocedure), and that the law has #een o#eyed (=o. @1, section @@!). 3%N the GidoG( even as a partner had no a thorit! to sell the real estate o< the <ir;5 6here the partnership #usiness is to deal in merchandise and goods, i.e., mova#le property, the sale of its real property (immova#le) is not within the ordinary powers of a partner, #ecause it is not in line with the normal #usiness of the firm. Gut where the e$press and avowed purpose of the partnership is to #uy and sell real estate (as in the present case), the immova#les thus acFuired #y the firm from part of its stoc&-in trade, and the sale thereof is in pursuance of partnership purposes, hence within the ordinary powers of the partner. 2ince the sale #y the widow was in conformity with the e$press o#*ective of the partnership, %to engage ... in buying and selling real estate% (Art. 1B, =o. 1 Articles of (o-partnership), it cannot #e maintained that the sale was made in e$cess of her power as general partner. (onsidera#le stress is laid #y appellant in the ruling of the 2upreme (ourt of Ahio in #cGrath, et al., vs. $owen, et al., ! =.4., @@8. Gut the facts of that case are vastly different from the one #efore us. 1n the ;c<rath case, the sale included even the fi$tures used in the #usiness9 in our case, the lands sold were those acFuired to #e sold. 1n the ;c<rath case, none of the creditors were pressing for payment9 in our case, the creditors had #een unpaid for more than seven years, and their claims had #een approved #y the pro#ate court for payment. 1n the ;c<rath case, the partnership received nothing #eyond the discharge of its de#ts9 in the present case, not only did the #uyers assume its de#ts, #ut also the latter paid, in addition, '@0, ???.?? in cash to the widow, to the profit of the partnership. (learly, the ;c<rath ruling is not applica#le. 3%N there Gas <ra d # N% =o direct evidence of it e$ists. +o show that the price was inadeFuate, appellant relies on the testimony of the realtor ;ata, who is 1 DD, six years after the sale in Fuestion,

asserted that the land was worth '@1>, ???.??. +a&ing into account the continued rise of real estate values since li#eration, and the fact that the sale in Fuestion was practically a forced sale #ecause the partnership had no other means to pay its legitimate de#ts, this evidence certainly does not show such %gross inadeFuacy% as to *ustify recession of the sale. 6ith regard to the relationship #etween the parties, suffice it to say that the 2upreme (ourt has ruled that relationship alone is not a #adge of fraud (Aria 7nos. vs. ;c;ic&ing). +here is no evidence that the original #uyers, 6ashington 2ycip and Getty 8ee, were without independent means to purchase the property. +hat the Jutivos should #e willing to e$tend credit to them, and not to appellant, is neither illegal nor immoral9 at the very least, these #uyers did not have a record of inveterate defaults li&e the partnership %+an 2in An R <oFuiolay%. A final and conclusive consideration5 +he fraud charged not #eing one used to o#tain a partyCs consent to a contract (i.e., not #eing deceit or dolus in contrahendo), if there is fraud at all, it can only #e a fraud of creditors that gives rise to a rescission of the offending contract. Gut #y e$press provision of law (Article 1> !, (ivil (ode of 188 9 Article 1@8@, =ew (ivil (ode) %the action for rescission is su#sidiary9 it can not #e instituted e$cept when the party suffering damage has no other legal means to o#tain reparation for the same%

(. 8ia#ility for 6rongful Acts or Amissions J. +iose*o 1nvestment (orp v Ang - ;iguel ;unasFue v (A - (ary <... =o. 8-@ 08? =ovem#er 11, 1 8D 48;A ;3`A2S34, petitioner, vs. (A3.+ A/ A''4A82,(4842+1=A <A8A= +.A'1(A8 (A;;4.(1A8 (A;'A=J and .A;A= 'A=2, respondents. /acts5 'etitioner 4lmo ;uaasFue filed a complaint for payment of sum of money and damages against respondents (elestino <alan, +ropical (ommercial, (o., 1nc. (+ropical) and .amon 'ons, alleging that the petitioner entered into a contract with respondent +ropical through its (e#u Granch ;anager 'ons for remodelling a portion of its #uilding without e$changing or e$pecting any consideration from <alan although the latter was casually named as partner in the contract +he present controversy #egan when petitioner ;uaasFue in #ehalf of the partnership of %<alan and ;uaasFue% as (ontractor entered into a written contract with respondent

+ropical for remodelling the respondentCs (e#u #ranch #uilding. A total amount of '>D,???.?? was to #e paid under the contract for the entire services of the (ontractor. 'etitioner contends that the appellate court erred in holding that he and respondent <alan were partners, the truth #eing that <alan was a sham and a perfidious partner who misappropriated the amount of '1@,???.?? due to the petitioner. 'etitioner also contends that the appellate court committed grave a#use of discretion in holding that the payment made #y +ropical to <alan was %good% payment when the same gave occasion for the latter to misappropriate the proceeds of such payment. 1ssue5 6hether or not there e$isted a *ustifia#le cause on the part of respondent +ropical to dis#urse money to respondent <alan. 7eld5 +he contentions are without merit. +he records will show that the petitioner entered into a contract with +ropical for the renovation of the latterCs #uilding on #ehalf of the partnership of %<alan and ;uaasFue.% +his is readily seen in the first paragraph of the contract. +here is nothing in the records to indicate that the partnership organi:ed #y the two men was not a genuine one. 1f there was a falling out or misunderstanding #etween the partners, such does not convert the partnership into a sham organi:ation. +here is a general presumption that each individual partner is an authori:ed agent for the firm and that he has authority to #ind the firm in carrying on the partnership transactions. +he presumption is sufficient to permit third persons to hold the firm lia#le on transactions entered into #y one of mem#ers of the firm acting apparently in its #ehalf and within the scope of his authority. 6hile it is true that under Article 181" of the (ivil (ode,%All partners, including industrial ones, shall #e lia#le prorate with all their property and after all the partnership assets have #een e$hausted, for the contracts which may #e entered into the name and fm the account cd the partnership, under its signature and #y a person authori:ed to act for the partner-ship. ...%. this provision should #e construed together with Article 18>! which provides that5 %All partners are lia#le solidarily with the partnership for everything chargea#le to the partnership under Articles 18>> and 18>@.% 1n short, while the lia#ility of the partners are merely *oint in transactions entered into #y the partnership, a third person who transacted with said partnership can hold the partners solidarily lia#le for the whole o#ligation if the case of the third person falls under Articles 18>> or 18>@.

+he o#ligation is solidary, #ecause the law protects him, who in good faith relied upon the authority of a partner, whether such authority is real or apparent. +hat is why under Article 18>! of the (ivil (ode all partners, whether innocent or guilty, as well as the legal entity which is the partnership, are solidarily lia#le. 1n the case at #ar the respondent +ropical had every reason to #elieve that a partnership e$isted #etween the petitioner and <alan and no fault or error can #e imputed against it for ma&ing payments to %<alan and Associates% and delivering the same to <alan #ecause as far as it was concerned, <alan was a true partner with real authority to transact on #ehalf of the partnership with which it was dealing. +his is even more true in the cases of (e#u 2outhern 7ardware and Glue -iamond <lass 'alace who supplied materials on credit to the partnership. +hus, it is #ut fair that the conseFuences of any wrongful act committed #y any of the partners therein should #e answered solidarily #y all the partners and the partnership as a whole 7owever. as #etween the partners ;uaasFue and <alan,*ustice also dictates that ;uaasFue #e reim#ursed #y <alan for the payments made #y the former representing the lia#ility of their partnership to herein intervenors, as it was satisfactorily esta#lished that <alan acted in #ad faith in his dealings with ;uaasFue as a partner. Island Sales In" v -nited Pioneers General Const Co5 # M!ta IS0AN+ SA0ES( INC5( plaintiff-appellee, vs. -NITE+ PI%NEERS GENERA0 C%NSTR-CTI%N C%MPANY( ET5 A0 de<endants5 BEN$AMIN C5 +AC%( defendantappellant. G5R5 No5 0#))'8A $ l! A7( 78:9

7iabi"ity for &rongfu" 8cts or 9missions: Condonation by creditor of share in partnership debt of one partner does not increase pro rata "iabi"ity of other partners. /ACTS, 3nited 'ioneers <eneral (onstruction (ompany is a general partnership formed #y Gen*amin -aco, -aniel <ui:ona, =oel 2im, Augusto 'alisoc and .omulo 8umauig. 1n 1 "1, 3nited 'ioneers purchased a motor vehicle on installment #asis from 1sland 2ales, 1nc. /or this purpose, they e$ecuted a promissory note, paya#le in twelve (1>) eFual monthly installments, with the condition that failure to pay any of said installments as they fall due would render the whole unpaid #alance immediately due and demanda#le. 3nited 'ioneers defaulted in its payment hence it was sued for the unpaid #alance. Gen*amin (. -aco, -aniel A. <ui:ona, =oel (. 2im, .omulo G. 8umauig, and Augusto

'alisoc were included as co-defendants in their capacity as general partners of the company. An motion of 1sland 2ales, the complaint was dismissed insofar as the defendant 8umauig is concerned. 3nited 'ioneers lost the civil case and the trial court rendered *udgment ordering 3nited 'ioneers to pay the outstanding #alance plus interest and costs. 1t further ordered the remaining four (!) co-defendants to pay 1sland 2ales in case 3nited 'ioneers, property will not #e enough to satisfy its inde#tedness to 1sland 2ales. ISS-E, 6hether or not the dismissal of the complaint to favor one of the general partners of a partnership increases the *oint and su#sidiary lia#ility of each of the remaining partners for the o#ligations of the partnership. HE0+, N%5 +heir lia#ility is pro-rata pursuant to Article 181" of the (ivil (ode. +here were five (D) general partners when the promissory note in Fuestion was e$ecuted for and in #ehalf of the partnership. 2ince the lia#ility of the partners is pro rata, the lia#ility of each general partner shall #e limited to only one-fifth (1MD) of the o#ligations of the company. +he fact that the complaint against defendant 8umauig was dismissed, upon motion of the plaintiff, does not unma&e 8umauig as a general partner. 1n so moving to dismiss the complaint, 1sland 2ales merely condoned 8umauigCs individual lia#ility to them. 1_. -issolution and winding up 1. Boluntary A. -efinition 2y v (A - Galdr 2y vs ca /acts5 -Jong 7u R 2ons is a partnership of 2y Jong 7u and his sons, Jose 2y, Jayme 2y, ;arciano 2y, 6illie 2y, Bicente 2y, and Jesus 2y, registered with the 24( on ;arch > , 1 ">, with Jose 2y as managing partner. -;arciano 2y filed a petition for declaratory relief against partners Bicente 2y, Jesus 2y and Jayme 2y, praying that he #e appointed managing partner of the partnership, to replace Jose 2y who died on August 1>, 1 08. Answering the petition, Bicente 2y, Jesus 2y and Jaime 2y, who claim to represent the ma*ority interest in the partnership, sought the dissolution of the partnership and the appointment of Bicente 2y as managing partner. 1n due time, 7earing Afficer 4mmanuel 2ison came out with a decision (2ison -ecision) dismissing the petition, dissolving the partnership and naming Jesus 2y, in lieu of Bicente 2y who had died earlier, as the managing partner in charge of winding the affairs of the partnership. -+he 2ison decision was affirmed in toto #y the 24( en #anc in a decisionT1>U (A#ello decision) dated June 8, 1 8>, disposing thus5

Hthe (ommission en #anc affirms the dispositive portion of the decision of the 7earing Afficer, #ut clarifies that5 (1) the partnership was dissolved #y e$press will of the ma*ority and not ipso facto #ecause of the death of any partner in view of the stipulation of Articles of 'artnership and the provisions of the =ew (ivil (ode particularly Art. 18@0 and Art. 18!1. (>) +he case is remanded to the 7earing Afficer for evaluation and approval of the accounting and pro*ect of partition.) -uring the continuation of the proceedings in 24( (ase , now presided over #y 7earing Afficer /elipe 2. +ongco who had su#stituted 7earing Afficer 2ison, the propriety of placing the 'artnership under receivership was ta&en up. 7earing Afficer +ongco came out with an Arder (+ongco Arder) incorporating the a#ove su#missions of the parties and placing the partnership under a receivership committee, e$plaining that Hit is the most eFuita#le fair and *ust manner to preserve the assets of the partnership during the pendency of the civil case in the .egional +rial (ourt of Gacolod (ity.) (a affirmed the decision. 1ssue5 6M= the tongco decision 671(7 7A- 232'4=-4- +74 -122A83+1A= A/ +74 'A.+=4.271' A=- +74 -12+.1G3+1A= A/ 1+2 A224+2, A=- 1= '8A(1=< +74 'A.+=4.271' '.A'4.+142 3=-4. .4(41B4.271' is correct. 7eld5 'etitioners fault the (ourt of Appeals for affirming the 1 8 -ecision of the 24( which approved the appointment of a receivership committee as ordered #y 7earing Afficer /elipe +ongco. +hey theori:e that the 1 88 +ongco -ecision varied the 1 8> A#ello -ecision affirming the dissolution of the partnership, contrary to the final and e$ecutory tenor of the said *udgment. +o #uttress their theory, petitioners offer the 1 88 2ulit -ecision which, among others, e$pressly confirmed the finality of the A#ello -ecision. An the same premise, petitioners aver that when 7earing Afficer +ongco too& over from 7earing Afficer 2ison, he was left with no course of action as far as the proceedings in the 24( (ase were concerned other than to continue with the partition and distri#ution of the partnership assets. +hus, the Arder placing the partnership under a receivership committee was erroneous and tainted with e$cess of *urisdiction. +he contentions are untena#le. 'etitioners fail to recogni:e the #asic distinctions underlying the principles of dissolution, winding up and partition or distri#ution. +he dissolution of a partnership is the change in the relation of the parties caused #y any partner ceasing to #e associated in the carrying on, as might #e distinguished from the winding up, of its #usiness. 3pon its dissolution, the partnership continues and its legal personality is retained until the complete winding up of its #usiness culminating in its termination. +he dissolution of the partnership did not mean that the *uridical entity was immediately terminated and that the distri#ution of the assets to its partners should perfunctorily

follow. An the contrary, the dissolution simply effected a change in the relationship among the partners. +he partnership, although dissolved, continues to e$ist until its termination, at which time the winding up of its affairs should have #een completed and the net partnership assets are partitioned and distri#uted to the partners. +he error, therefore, ascri#ed to the (ourt of Appeals is devoid of any sustaina#le #asis. +he A#ello -ecision though, indeed, final and e$ecutory, did not pose any o#stacle to the 7earing Afficer to issue orders not inconsistent therewith. /rom the time a dissolution is ordered until the actual termination of the partnership, the 24( retained *urisdiction to ad*udicate all incidents relative thereto. +hus, the disputed order placing the partnership under a receivership committee cannot #e said to have varied the final order of dissolution. =either did it suspend the dissolution of the partnership. 1f at all, it only suspended the partition and distri#ution of the partnership assets pending disposition of (ivil (ase =o. ?@ on the #asis of the agreement #y the parties and under the circumstances of the case. 1t #ears stressing that, li&e the appointment of a manager in charge of the winding up of the affairs of the partnership, said appointment of a receiver during the pendency of the dissolution is interlocutory in nature, well within the *urisdiction of the 24(. 1dos v (A - pat IRMA I+%S vs5 C%-RT %/ APPEA0S AN+ PE%P0E %/ THE PHI0IPPINES .eview of the decision of the (ourt of Appeals dismissing the petitioner,s appeal and affirming her conviction for violation of G' >>. /ACTS 1rma 1dos and the G' >> complainant, 4ddie Alarilla, were partners in a leather tanning #usiness, H+agumpay ;anufacturing.) Goth parties agreed to terminate their partnership after a year. 3pon liFuidation of the #usiness, the partnership had '1.8; worth of stoc&s and receiva#les. +he complainant,s share in the asset is ' ??& for which 1dos issued ! post-dated chec&s. (omplainant was a#le to encash all chec&s e$cept the @ rd one which was dishonored for insufficiency of funds. 7e demanded payment #ut 1dos failed to pay thus the institution of the G' >> case. .+( ruled in favor of complainant and such was affirmed #y the (A. ISS-E 6hether respondent court erred in holding that the su#*ect chec& was issued #y petitioner to apply on account or for value, that is, as part of the consideration of a %#uyout% of said complainantCs interest in the partnership, and not merely as a commitment on petitionerCs part to return the investment share of complainant, along with any profit pertaining to said share, in the partnership. R-0ING Jes. 'etitioner issued the chec& merely to evidence the proportionate share of complainant in the partnership assets upon its dissolution. 'ayment of that share in the

partnership was conditioned on the su#seFuent reali:ation of profits from the unsold goods and collection of the receiva#les of the firm. +his condition must #e satisfied or complied with #efore the complainant can actually %encash% the chec&. +he reason for the condition is that petitioner has no independent means to satisfy or discharge the complainantCs share, other than #y the future sale and collection of the partnership assets. +hus, prior to the selling of the goods and collecting of the receiva#les, the complainant could not, as of yet, demand his proportionate share in the #usiness. +his situation would hold true until after the winding up, and su#seFuent termination of the partnership. /or only then, when the goods were already sold and receiva#les paid that cash money could #e availed of #y the erstwhile partners. 3nder the (ivil (ode, the three final stages of a partnership are (1) dissolution9 (>) winding-up9 and (@) termination. +hese stages are distinguished, to wit5 (1) Disso"ution Defined -issolution is the change in the relation of the partners caused #y any partner ceasing to #e associated in the carrying on of the #usiness (Art. 18>8). 1t is that point of time the time the partners cease to carry on the #usiness tonether. ((itation omitted). (>) &inding 6p Defined 6inding up is the process of settling #usiness affairs of dissolution. (@) Termination Defined +ermination is the point in time after a"" the partnership affairs have been #ound up. +hese final stages in the life of a partnership are recogni:ed under the (ivil (ode that e$plicitly declares that upon dissolution, the partnership is not terminated, to wit5 Art 18>8. +he dissolution of a partnership is the change in the relation of the partners caused #y any partner ceasing to #e associated in the carrying on as distinguished from the #inding up of the business. Art. 18> . An dissolution the partnership is not terminated, #ut continues until the winding up of partnership affairs is completed. (4mphasis supplied.) +he #est evidence of the e$istence of the partnership, which was not yet terminated (though in the winding up stage), were the unsold goods and uncollected receiva#les, which were presented to the trial court. 2ince the partnership has not #een terminated, the petitioner and private complainant remained as co-partners. +he chec& was thus issued #y the petitioner to complainant, as would a partner to another, and not as payment from a de#tor to a creditor. G. (auses of dissolution 3y v pu:on - Jen 8ichauco v 8ichauco - (iv

G5R5 No5 0#'9'J' April )B( 78A8 $%S-E S%NC-YA( plaintiff-appellant, vs. CARMEN +E 0-NA( defendant-appellee 'laintiff 2oncuya, defendant -e 8una and deceased 8i#rada Avelino were mem#ers of the partnership (entro 4scolar de 2eaoritas. An 2eptem#er 11, 1 @", plaintiff Josue 2oncuya filed with the (ourt of /irst 1nstance of ;anila an amended complaint against (armen de 8una in her own name and as co-administratri$ of the intestate estate, of 8i#rada Avelino. 1n the amended complaint it is prayed that defendant (armen de 8una #e sentenced to pay plaintiff damages in the sum of '0??,!@> as a result of the <ra d lent ad;inistration o< the partnership5 /or the purpose of ad*udicating to plaintiff damages which he alleges to have suffered as a partner #y reason of the supposed fraudulent management of he partnership referred to( it is <irst ne"essar! that a li> idation o< the & siness thereo< &e ;ade to the end that the pro<its and losses ;a! &e 6noGn and the "a ses o< the latter and the responsi&ilit! o< the de<endant as Gell as the da;ages Ghi"h ea"h partner ;a! have s <<ered( ;a! &e deter;ined5 1t is not alleged in the complaint that such a liFuidation has #een effected nor is it prayed that it #e made. (onseFuently, there is no reason or cause for plaintiff to institute the action for damages which he claims from the managing partner (armen de 8una. 'etition -ismissed. .ural #an& of lipa city, inc v (A - leandro Facts: Reynaldo Villanueva, Sr., a stockholder of the Rural Bank of Lipa City, executed a Deed of ssi!n"ent, #herein he assi!ned his shares, as #ell as those of $ other shareholders under his control #ith a total of %&,'() shares, in favor of the stockholders of the Bank represented *y its directors Bernardo Bautista, +ai"e Custodio and ,ctavio -ati!*ak. So"eti"e thereafter, Reynaldo Villanueva, Sr.and his #ife, velina, executed an !ree"ent #herein they ackno#led!ed their inde*tedness to the Bank in the a"ount of .',&&&,&&&.&&, and stipulated that said de*t #ill *e paid out of the proceeds of the sale of their real property descri*ed in the !ree"ent. t a "eetin! of the Board of Directors of the Bank on %/ 0ove"*er %112, the Villanueva spouses assured the Board that their de*t #ould *e paid on or *efore Dece"*er 2% of that sa"e year3 other#ise, the Bank #ould *e entitled to li4uidate their shareholdin!s, includin! those under their control. 5n such an event, should the proceeds of the sale of said shares fail to satisfy in full the o*li!ation, the unpaid *alance shall *e secured *y other collateral sufficient therefor. 6hen the Villanueva spouses failed to settle their o*li!ation to the Bank on the due date, the Board sent the" a letter de"andin!: 7%8 the surrender of all the stock certificates issued to the"3 and 798 the delivery of sufficient collateral to secure the *alance of their de*t a"ountin! to.2,2'(,$1$./'.:he Villanuevas i!nored the *ank;s de"ands, #hereupon their shares of stock #ere converted into :reasury Stocks. Later, the Villanuevas, throu!h their counsel, 4uestioned the le!ality of the conversion of their shares. ,n %/ +anuary %11', the stockholders of the Bank

"et to elect the ne# directors and set of officers for the year %11'. :he Villanuevas #ere not notified of said "eetin!. 5n a letter dated %1+anuary %11', tty. "ado 5!nacio, counsel for the Villanueva spouses, 4uestioned the le!ality of thesaid stockholders; "eetin! and the validity of all the proceedin!s therein. 5n reply, the ne# set ofofficers of the Bank infor"ed tty. 5!nacio that the Villanuevas #ere no lon!er entitled to notice of thesaid "eetin! since they had relin4uished their ri!hts as stockholders in favor of the Bank. Conse4uently,the Villanueva spouses filed #ith the Securities and <xchan!e Co""ission 7S<C8, a petition forannul"ent of the stockholders; "eetin! and election of directors and officers on %/ +anuary %11', #ithda"a!es and prayer for preli"inary in=unction 7S<C Case &9>1'>'($2?. +oinin! the" as co> petitioners#ere Catalino Villanueva, ndres @onAales, urora Lacerna, Celso Lay!o, <d!ardo Reyes, le=andro:ono!an, and <lena Bsi. 0a"ed respondents #ere the ne#ly>elected officers and directors of the RuralBank, na"ely: Bernardo Bautista, +ai"e Custodio, ,ctavio -ati!*ak, Francisco Custodio and +uanitaBautista. ,n ( pril %11', the Villanuevas; application for the issuance of a #rit of preli"inary in=unction #as denied *y the S<C Cearin! ,fficer on the !round of lack of sufficient *asis for the issuance thereof. Co#ever, a "otion for reconsideration #as !ranted on %( Dece"*er %11', upon findin! that since the Villanuevas; have not disposed of their shares, #hether voluntarily or involuntarily, they #ere still stockholders entitled to notice of the annual stockholders; "eetin! #as sustained *y the S<C. ccordin!ly, a #rit of preli"inary in=unction #as issued en=oinin! Bautista, et. al. fro" actin! as directors and officers of the *ank. :hereafter, Bautista, et al. filed an ur!ent "otion to 4uash the #rit ofpreli"inary in=unction, challen!in! the propriety of the said #rit considerin! that they had not yetreceived a copy of the order !rantin! the application for the #rit of preli"inary in=unction. 6ith the i"pendin! %11/ annual stockholders; "eetin! only 1 days a#ay, the Villanuevas filed an ,"ni*us Dotion prayin! that the said "eetin! and election of officers scheduled on %' +anuary %11/ *e suspended or held in a*eyance, and that the %112 Board of Directors *e allo#ed, in the "eanti"e, to act as such. % day *efore the scheduled stockholders "eetin!, the S<C Cearin! ,fficer !ranted the ,"ni*us Dotion *y issuin! a te"porary restrainin! order preventin! Bautista, et al. fro" holdin! the stockholders "eetin! and electin! the *oard of directors and officers of the Bank. petition forCertiorari and nnul"ent #ith Da"a!es #as filed *y the Rural Bank, its directors and officers *efore theS<C en *anc. ,n ) +une %11/, the S<C en *anc denied the petition for certiorari. su*se4uent "otionfor reconsideration #as like#ise denied *y the S<C en *anc in a Resolution dated 91 Septe"*er %11/. petition for revie# #as filed *efore the Court of ppeals 7C >@R S. 2$$(%8, assailin! the ,rder dated )+une %11/ and the Resolution dated 91 Septe"*er %11/ of the S<C en *anc in S<C <B ''&. :he appellatecourt upheld the rulin! of the S<C. Bautista, et al.;s "otion for reconsideration #as like#ise denied *ythe Court of ppeals in an ,rder dated 91 Darch %11(. :he *ank, Bautista, et al. filed the instant petition for revie#. 5ssue: 6hether there #as valid transfer of the shares to the Bank. Celd: For a valid transfer of stocks, there "ust *e strict co"pliance #ith the "ode of transfer prescri*ed *y la#. :he re4uire"ents are: 7a8 :here "ust *e delivery of the stock certificate: 7*8 :he certificate "ust *e endorsed *y the o#ner or his attorney>in>fact or other persons le!ally authoriAed to "ake the transfer3 and 7c8 :o *e valid a!ainst third parties, the transfer "ust *e

recorded in the *ooks of the corporation. s it is, co"pliance #ith any of these re4uisites has not *een clearly and sufficiently sho#n.Still, #hile the assi!n"ent "ay *e valid and *indin! on the *ank, et al. and the Villanuevas, it does not necessarily "ake the transfer effective. Conse4uently, the *ank et al., as "ere assi!nees, cannot en=oy the status of a stockholder, cannot vote nor *e voted for, and #ill not *e entitled to dividends, insofar as the assi!ned shares are concerned. .arenthetically, the Villanuevas cannot, as yet, *e deprived of their ri!hts as stockholders, until and unless the issue of o#nership and transfer of the shares in 4uestion is resolved #ith finality. 9. 5nvoluntary BearneHa v +e> illa # Fean /a"ts, Gal#ino -eFuilla and 'erpetua Gearne:a formed a partnership to e$ploit fishpond located 'rovince of 1loilo. 'erpetua died in 1 1> where a will was left appointing -omingo Gearne: to succeed on her rights and interest on the said fishpond. -omingo Gearne: demanded from Gal#ino -eFuilla for delivery of part of fishpond #elonging to decedent. Gal#ino -eFuilla denied there was partnership saying, %the formation of the supposed partnership #etween the plaintiff and the defendant for the e$ploitation of the aforesaid fish pond was not carried into effect, on account of the plaintiff having refused to defray the e$penses of reconstruction and e$ploitation of said fish pond.% 8ower court ruled favoring plaintiff as owner of P portion &nown as %Alimango% and %-alusan.% Iss e, 6hether or not the plaintiff has any right to maintain an action for the recovery of one-half of the said fish pondE R ling, 3e <ind that the plainti<< has not s <<i"ientl! shoGn his right o< a"tion . +he partnership formed #y 'erpetua Gearne:a and Gal#ino -eFuilla, as to the e$istence of which the proof contained in the record is conclusive and there is no dispute, was of a civil nature. 1t was a particular partnership, as defined in article 1"08 of the (ivil (ode, it having had for its su#*ect-matter a specified thing, to with, the e$ploitation of the aforementioned fish pond. +his partnership not having #een organi:ed in the form of a mercantile partnership, and, therefore, the provisions of the (ode of (ommerce not #eing applica#le thereto (article 1"0? of the (ivil (ode), it was dissolved #y the death of 'erpetua Gearne:a, and falls under the provisions of article 10??, su#section @, of the same (ode, and not under the e$ception esta#lished in the last paragraph of said article 10?? of the (ivil (ode. +he partnership having #een dissolved #y the death of 'erpetua Gearne:a, its su#seFuent legal status was that of a partnership in liFuidation, and the only rights inherited #y her testamentary heir, the herein plaintiff, were those resulting from the said liFuidation in favor of the deceased partner, and nothing more. Gefore this liFuidation is made, which up to the present has not #een effected, it is impossi#le to determine what

rights or interests, if any, the deceased had, the partnership #ond having #een dissolved.

'etitioner 8im +ong 8im. +he suit was #rought against the three in their capacities as general partners, on the allegation that %Acean Suest /ishing (orporation% was a none$istent corporation as shown #y a (ertification from the 2ecurities and 4$change (ommission. +( - (hua, Jao and 8im, as general partners (of Acean Suest /ishing (orporation), were *ointly lia#le to pay respondent. C8;affirmed ISS-E, 6A= #y their acts, 8im, (hua and Jao could #e deemed to have entered into a partnershipE %&'() *&+. +he facts as found #y the two lower courts clearly showed that there e$isted a partnership among (hua, Jao and him, pursuant to Article 10"0 of the (ivil (ode which provides5 Art. 10"0 O Gy the contract of partnership, two or more persons #ind themselves to contri#ute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. (hua, Jao and 8im had decided to engage in a fishing #usiness, which they started #y #uying #oats worth '@.@D million, financed #y a loan secured from Jesus 8im who was petitionerCs #rother. 1n their (ompromise Agreement, they su#seFuently revealed their intention to pay the loan with the proceeds of the sale of the #oats, and to divide eFually among them the e$cess or loss. +hese #oats, the purchase and the repair of which were financed with #orrowed money, fell under the term %common fund% under Article 10"0. +he contri#ution to such fund need not #e cash or fi$ed assets9 it could #e an intangi#le li&e credit or industry. +hat the parties agreed that any loss or profit from the sale and operation of the #oats would #e divided eFually among them also shows that they had indeed formed a partnership. ;oreover, it is clear that the partnership e$tended not only to the purchase of the #oat, #ut also to that of the nets and the floats. +he fishing nets and the floats, #oth essential to fishing, were o#viously acFuired in furtherance of their #usiness. 1t would have #een inconceiva#le for 8im to involve himself so much in #uying the #oat #ut not in the acFuisition of the aforesaid eFuipment, without which the #usiness could not have procee +he *udgment appealed from is modified, the same #eing affirmed insofar as it denies

the plaintiffCs claim for damages, and reversed insofar as it declares the said plaintiff owner of one-half of the fish pond, %Alimango% and %-alusan,% here in dispute. <uidote v Gor*a - tats /ACTS ;a$imo <uidote and =arciso 2antos formed in 1 18 a partnership #usiness under the name of H+aller 2inu&uan,) in which 2antos was the capitalist partner and <uidote was the industrial partner. 2antos died in 1 >?. <uidote failed to liFuidate the affairs of the partnership and to render an account thereof to Gor*a, the administratri$ of 2antos, estate. G idote &ro ght an a"tion against BorFa to re"over a s ; o< ;one!5 BorFa ad;itted the partnership=s existen"e and pra!ed that G idote &e ordered to render an a""o nting and to pa! the estate )96 as net pro<its( "redits( and propert! pertaining to Santos5G idote "alled several Gitnesses and introd "ed a so#"alled a""o nting and a ;ass o< do" ;entar! eviden"e ,which was so hopelessly and ine$trica#ly confused that the court could not consider it of much pro#ative value. The "o rt dis;issed G idote,s "o;plaint and a&solved BorFa5 <uidote was ordered to render a full and complete accounting, verified #y vouchers, of the partnership #usiness. G idote rendered an a""o nt prepared &! one To;as Al<onso( a p &li" a""o ntant5 The "o rt disapproved the a""o nt and ordered that BorFa s &;it an a""o nting from the date of the commencement of the partnership up to the time the #usiness was closed. BorFa presented an a""o nt and li> idation prepared &! a p &li" a""o ntant( Santiago A5 0inda!a( shoGing a &alan"e o< P)86P in BorFa=s QSantos= estateR <avor5 At the hearing, Gor*a introduced the pu#lic accountant Jose +uriano 2antiago to testify as to the results of an audit made #y him of the partnership accounts. 2antiago testified that he had prepared a separate accounting or liFuidation similar in results to that prepared #y 8indaya, #ut with a few differences in the sums total. Co;p tation, 2antos is a creditor of the +aller 2inu&uan in the sum of '>"&. <uidote is a de#tor to the +aller 2inu&uan in the sum of '>?&.U In order to "ontradi"t the "on"l sions o< the tGo p &li" a""o ntants( G idote presented To;as Al<onso and the&oo66eeper( Pio Ga dier( as Gitnesses5 The trial "o rt F dge said that the testi;onies o< these Gitnesses are nrelia&le5

To;as Al<onso is the same pu#lic accountant who filed the liFuidation 4$hi#it A on #ehalf of <uidote, in relation tothe partnership #usiness, which liFuidation was disapproved #y this court in a decision. +he *udge did not #elieve Alfonso,s proposition that <uidote, a mere industrial partner, notwithstanding his having received >1& on the various *o#s and contracts of the #usiness had actually e$pended and paid out "@&, of !!& in e$cess of the gross receipts ofthe #usiness. 1t materially contradicts <uidote,s allegations to the effect that the advances that he T<uidoteU madeamounted only to >&. Pio Ga dier is the same #oo&&eeper who prepared three entirely separate and distinct liFuidation for the samepartnership #usiness, and the court found that the testimony given #y him at the last hearing is confusing,contradictory and unrelia#le. %ther Gitnesses Gere given s"ant "onsideration O (hua (ha& can neither read nor write 4nglish, 2panish, or+agalog9 (laro .eyes was forced to admit that a certain e$hi#it was not the original. The "o rt gave "reden"e to the "on"l sions rea"hed &! the p &li" a""o ntants presented &! BorFa5 G idote Gas ordered to pa! P)J6 to BorFa( Gith legal interest( pl s "osts5ISS-E 1 H%0+ING 122345 6M= the trial court is correct in ordering <uidote to pay '>"& to Gor*a. HE0+, Yes +here may #e some merit in <uidote,s contention that the dismissal of his complaint was premature. +he #etter practice would #een to let the complaint stand until the result of the liFuidation of the partnership affairs was &nown. Gut under the circumstances, no harm was done #y the dismissal of <uidote,s complaint. G-I+%TE=S ARG-MENT 2ince 2antos, up to the time of his death, generally too& care of the partnership,s payments and collections, his legal representatives were under the o#ligation to render accounts of the operations, notwithstanding the fact that <uidote was in charge of the #usiness su#seFuent to the death of 2antos. G-I+%TE=S ARG-MENT IS -NA4AI0ING 3ahl v5 +onaldson Si; 1 Co5 +he death of one of the partners dissolves the partnership, #ut that the liFuidation of its

affairs is #y law entrusted, not to thee$ecutors of the deceased partner, #ut to the surviving partners or the liFuidators appointed #y them. The r le <or the "ond "t o< a s rviving partner 1n eFuity, surviving partners are treated as tr stees of the representatives of the deceased partner, with regard to the interest of the deceased partner in the firm. As a conseFuence of this trusteeship, surviving partners are held in their dealings with the firm assets and the representatives of the deceased to that nicety of dealing and that strictness of accounta#ility reFuired of and incident to the position of one occupying a confidential relation. 1t is the duty of surviving partners to render an account of the performance of their trust to the personal representatives of the deceased partner, and to pay over to them the share of such deceased mem#er in the surplus of firm property, whether it consists of real or personal assets.<uidote failed to o#serve this rule, and he is not in position to complain if his testimony and that of his witnesses is discredited. The appealed F dg;ent is A//IRME+ <oFuiolay v 2ycip 1?8 'hil !0 - Gianca G5R5 No5 0#77B'* $ l! )J( 78J* ANT%NI% C5 G%C-I%0AY and THE PARTNERSHIP ETAN SIN AN and ANT%NI% C5 G%C-I%0AY( plaintiffs-appellants, vs. 3ASHINGT%N N5 SYCIP( ET A05( defendantsappellees. ^ +an 2in An and <oFuiolay entered into a general commercial partnership under the partnership name H+an 2in An and Antonio <oFuiolay) for the purpose of dealing in real estate. +he agreement lodged upon +an 2in An the sole management of the partnership affairs. ^ +he lifetime of the partnership was fi$ed at ten years and the Articles of (opartnership stipulated that in the event of death of any of the partners #efore the e$piration of the term, the partnership will not #e dissolved #ut will #e continued #y the heirs or assigns of the deceased partner. Gut the partnership could #e dissolved upon mutual agreement in writing of the partners. ^ <oFuiolay e$ecuted a <'A in favor of +an 2in An (allowing the latter to deal with real properties in #ehalf of the partnership.) ^ +he plaintiff partnership purchased @ parcels of land which was mortgaged to H8a 3r#ana) as payment of '>D,???. Another !" parcels of land were purchased #y +an 2in An in his individual capacity which he assumed payment of a mortgage de#t for '@DV. A down-payment and the amorti:ation were advanced #y Jutivo and (o. ^ +he two o#ligations were consolidated in an instrument e$ecuted #y the partnership and +an 2in An, where#y the entire ! lots were mortgaged in favor of

HGanco 7ipotecario ) (successor of 8a 3r#ana) +an 2in An died leaving his widow, Vong (hai 'in and four minor children. +he widow su#seFuently #ecame the administratri$ of the estate. ^ .epeated demands were made #y Ganco 7ipotecario on the partnership and on +an 2in An. -efendant 2ing Jee, upon reFuest of defendant Jutivo 2ons ,paid the remaining #alance of the mortgage de#t, the mortgage was cancelled ^ Jutivo 2ons and 2ing Jee filed their claim in the intestate proceedings of +an 2in An for advances, interest and ta$es paid in amorti:ing and discharging their o#ligations to H8a 3r#ana) and HGanco 7ipotecario) ^ Vong (hai 'in filed a petition with the pro#ate court for authority to sell all the ! parcels of land. 2he then sold it to 2ycip and 8ee in consideration of '@0V and of the vendees assuming payment of the claims filed #y Jutivo 2ons and 2ing Jee. ^ 8ater, 2ycip and 8ee e$ecuted in favor of 1nsular -evelopment a deed of transfer covering the ! parcels of land. 6hen <oFuiolay learned a#out the sale to 2ycip and 8ee, he filed a petition in the intestate proceedings to set aside the order of the pro#ate court approving the sale in so far as the three (@) lots owned #y the plaintiff partnership are concerned. ^ 'ro#ate court annulled the sale e$ecuted #y the administratri$ wM respect to the "?% interest of <oFuiolay over the properties Administratri$ appealed. +he decision of pro#ate court was set aside for failure to include the indispensa#le parties. =ew pleadings were filed ^ +he second amended complaint prays for the annulment of the sale in favor of 2ycip and 8ee and their su#seFuent conveyance to 1nsular -evelopment. 122345 1) 6A= the lower court erred in holding that Vong (hai 'in #ecame the managing partner of the partnership upon the death of her hus#andE >) 6A= the lower court erred in holding that the consent of Antonio <oFuiolay was not necessary to consummate the sale of the partnership propertiesE 748-5 1) YES5 .+( erred in holding that Vong (hai 'in, succeeded her hus#and in the sole management of the partnership, upon the latterCs death. +he provision in the articles stating that %in the event of death of any one of the partners within the 1?-year term of the partnership, the deceased partner shall #e represented #y his heirs%, does N%T in"l de the ;anagerial right given to +an 2in An9 more appropriately, it related to the

succession in the proprietary interest of each partner. +he covenant that Antonio <oFuiolay shall have no voice or participation in the management of the partnership, #eing a limitation upon his right as a general partner, must #e held coe$tensive only with +anCs right to manage the affairs. 3pon the other hand, (onsonant with the articles of co-partnership providing for the continuation of the firm notwithstanding the death of one of the partners, the heirs of the deceased, #y never repudiating or refusing to #e #ound under the said provision in the articles, #ecame individua" partners with Antonio <oFuiolay upon +anCs demise. +he validity of li&e clauses in partnership agreements is e$pressly sanctioned under Article >>> of the (ode of (ommerce. Vong (hai 'in, who, #y her affirmative actions, manifested her intent to #e #ound #y the partnership agreement not only as a limited #ut as a general partner. 2he managed and retained possession of the partnership properties and was admittedly deriving income therefrom up to and until the same were sold to 6ashington 2ycip and Getty 8ee. 1n fact, #y e$ecuting the deed of sale of the parcels of land in dispute in the name of the partnership, she was acting no less than as a managing partner. 7aving thus preferred to act as such, she could #e held lia#le for the partnership de#ts and lia#ilities as a general partner, #eyond what she might have derived only from the estate of her deceased hus#and. Gy allowing her to retain control of the firmCs property from 1 !> to 1 ! , plaintiff estopped himself to deny her legal representation of the partnership, with the power to #ind it #y the proper contracts. )@ N%5 +he Fuestion now arises as to whether or not the consent of the other partners was necessary to perfect the sale of the partnership properties to 6ashington 2ycip and Getty 8ee. +he answer is, we #elieve, in the negative. 2trangers dealing with a partnership have the right to assume, in the a#sence of restrictive clauses in the copartnership agreement, that every general partner has power to #ind the partnership, specially those partners acting with ostensi#le authority. +he latter may rightfully assume that the contracting partner was duly authori:ed to contract for and in #ehalf of the firm and that, furthermore, he would not ordinarily act to the pre*udice of his copartners. +he regular course of #usiness procedure does not reFuire that each time a third person contracts with one of the managing partners, he should inFuire as to the latterCs authority to do so, or that he should first ascertain whether or not the other partners had given their consent thereto. 1n fact, Article 1@? of the same (ode of (ommerce provides that even if a new o#ligation was contracted against the e$press will of one of the managing partners, %it shall not #e annu""ed for such reason, and it shall produce its effects without pre*udice to the responsi#ility of the mem#er or mem#ers who contracted it, for the damages they may have caused to the common fund.% Although the partnership under consideration is a commercial partnership and, therefore, to #e governed #y the (ode of (ommerce, the provisions of the old (ivil (ode may give us some light on the right of one partner to #ind the partnership. 2tates

Art. 1" D thereof5 2hould no agreement have #een made with respect to the form of management, the following rules shall #e o#served5 1. All the partners shall #e considered agents, and whatever any one of the may do individually shall #ind the partnership9 #ut each one may oppose any act of the others #efore it has #ecome legally #inding. +he records fail to disclose that appellant <oFuiolay made any opposition to the sale of the partnership realty to 6ashington I. 2ycip and Getty 8ee9 on the contrary, it appears that he (<oFuiolay) only interposed his o#*ections after the deed of conveyance was e$ecuted and approved #y the pro#ate court, and, conseFuently, his opposition came too late to #e effective. Appellants assails the correctness of the amounts paid for the account of the partnership as found #y the trial court. +his Fuestion, however, need not #e resolved here, as in the deed of conveyance e$ecuted #y Vong (hai 'in, the purchasers 6ashington 2ycip and Getty 8ee assumed, as part consideration of the purchase, the full claims of the two creditors, 2ing Jee and (uan (o., 1nc. and Jutivo 2ons 7ardware (o. Appellants also Fuestion the validity of the sale covering the entire firm realty, on the ground that it, in effect, threw the partnership into dissolution, which reFuires consent of all the partners. +his view is untena#le. +hat the partnership was left without the real property it originally had will not wor& its dissolution, since the firm was not organi:ed to e$ploit these precise lots #ut to engage in #uying and selling real estate, and %in general real estate agency and #ro&erage #usiness%. 1ncidentally, it is to #e noted that the payment of the solidary o#ligation of #oth the partnership and the late +an 2in An, leaves open the Fuestion of accounting and contri#ution #etween the co-de#tors, that should #e ventilated separately. NG CH% CI% ET A0( vs NG +I%NG 1 C5N5 Hodges( Et Al # Iris /ACTS, An ;ay >@, 1 >D, =g -iong, =g Ge (huat, =g /eng +uan =g Ge Vian =g (ho (io, =g 2ian Ving and =g -ue Ving entered into a contract of general co-partnership under the name NG CHIN BENG HERMAN%S5 +he partnership was to e$ist for a period of 1? years from ;ay >@, 1 >D and =g -iong was named as managing partner. An ;ay 1?, 1 @D, the articles of co-partnership were amended #y e$tending its life to 1" years more to #e counted from ;ay >@, 1 >D, or up to ;ay >@, 1 !1. An January D, 1 @8, the partnership o#tained from the =ational 8oan and 1nvestment Goard a loan in the amount of '@?,???.??, and to guarantee its payment it e$ecuted in its favor a mortgage on 8ots =os. >@"-G, @10-A, >@@ and D!? of the cadastral survey of 1loilo. An the same date, the partnership also o#tained from the same entity another

loan in the amount of 'D?,???.?? to secure which it also e$ecuted in its favor a mortgage on 8ots =os. @8", 8> and >@0 of the same cadastral survey. 2ometime in 1 @8, the partnership was declared insolvent upon petition of its creditors in, 2pecial 'roceedings =o. >!1 of the (ourt of /irst 1nstance of 1loilo wherein one (rispino ;elocoton was elected as assignee. An January @?, 1 !1, the Agricultural and 1ndustrial Gan& which had succeeded the =ational 8oan and 1nvestment Goard assigned its rights and interests in the loans o#tained from it #y the partnership in the aggregate amount of '8?,???.?? in favor of (.=. 7odges, together with the right and interest in the mortgage e$ecuted to secure the loans. 2ince said loans #ecame due and no payment was forthcoming, 7odges as&ed permission from the insolvency court to file a complaint against the assignee to foreclose he mortgage e$ecuted to secure the same in a separate proceeding, and permission having #een granted. An August 1D, 1 !D, the partners of the insolvent firm and Julian <o, who acFuired most of the claims of the creditors, filed a petition with the insolvency court praying at the insolvency proceedings #e closed or terminated cause the composition agreement the creditors had su#mitted relative to the settlement of the claims had already #een approved on Acto#er 1?, 1 !?. As of said date, April >, 1 !", the inde#tedness of the partnership to (. =. 7odges which was the su#*ect of the foreclosure proceedings in a separate case was '1?@,88@.@!5 In order to pa! o<< the sa;e and raise ne"essar! < nds to pa! the other o&ligations o< the partnership( it Gas dee;ed proper and Gise &! Ng +iong( Gho "ontin ed to &e the ;anager o< the partnership( to sell all its properties ;ortgaged to Hodges in order that the ex"ess ;a! &e applied to the Pa!;ent o< said other o&ligations( and to that e<<e"t Ng +iong exe" ted on April )( 78'J a deed o< sale thereo< in <avor o< Hodges <or the s ; o< P7)'(9B*5** . Aut of this price9 the sum of '1?@,88@.@! was applied to the payment of the de#t of the partnership to 7odges and the #alance was paid to the other creditors of the partnership. An the same date, 7odges e$ecuted another contract giving the partnership the right to repurchase 8ots =os. >@0, @8" and 8> in installments. An ;ay >@, 1 !0, the partnership had not yet paid its inde#tedness to Julian <o in he amount of '>!,8"!."> under the composition agreement, nor did it have any money to repurchase 8ots =os. >@0, @8" and 8> and so Ng +iong( in &ehal< o< the partnership( trans<erred the right o< the latter to rep r"hase the sa;e <ro; Hodges to $ lian Go in < ll pa!;ent o< the partnershipKs inde&tedness to hi; . And having Julian <o e$ercised the option January ", 1 !8, 7odges e$ecuted a deed of sale of the properties in his favor, and pursuant thereto the register of deeds issued new titlesC in his name covering said lots. An ;ay > , 1 !8, 7odges e$ecuted another deed of sale covering 8ots =os. @10-A, >@"-G, >@@ and D!? for the sum of '11 ,?"0.0 in favor of Jose (. +ayengco. And on August @1, 1 !8, +ayengco mortgaged said lots,

together with three other lots of his, to the Gan& of the 'hilippine 1slands to secure a loan of '1>",???.?? to #e used in the construction of a commercial #uilding on said lots. ISS-E, 6hether or not the sale made #y =g -iong in #ehalf of the partnership =< (71= G4=< 74.;A=A2 of the seven lots #elonging to it in favor of (. =. 7odges on April >, 1 !" is null and void #ecause at that time said parcels were still in the custody of the assignee of the insolvency proceedings, or in custodia legis, and, hence, the same is null and void9 HE0+, 1t would, therefore, appear that for legal and practical purposes the insolvency ended on said date. 2ince then partnership #ecame, restored to its status Fuo. 1t again reacFuired its personality as such with =g -iong as its general manager. /rom that date on its properties ceased to #e in custodia legis. 2uch #eing the case, it is o#vious that when =g -iong as manager of the partnership sold the seven parcels of land to (. =. 7odges on April >, 1 !" #y virtue of a deed of sale ac&nowledged #efore a notary pu#lic on April ", 1 !", the properties were already was at li#erty to do what it may deem convenient and proper to protect its interest. And acting accordingly, =g -iong made the sale in the e$ercise of the power granted to him #y the partnership in its articles of co-partnership. 6e do not, therefore, find anything irregular in this actuation of =g -iong. 2ince at the time of the sale the life of the partnership had already e$pired, the Fuestion may #e fi$ed5 6ho shall wind up it #usiness affairsE ;ay its manager still e$ecute the sale of its properties to (. =. =g -iong did 7odges asE +he answer to this Fuestion cannot #ut #e in the affirmative #ecause =g -iong was still the managing partner of the partnership and he had the necessary authority to liFuidate its affairs under its articles of co-partnership. And considering that war had intervened and the affairs of the partnership were placed under receivership up to Acto#er ", 1 !D, we are of the opinion that =g -iong could still e$ercise his power as liFuidator when he e$ecuted the sale in Fuestion in favor of (. =. 7odges. Article >>8 of the (ode of (ommerce sanctions this, which was the law in force at the time. (. 4ffect of dissolution -. .ights of partners 'rime lin& properties and devt corp v ma. (larita 8a:atin-;agat - miguel Artega v (A - (ary <... =o. 1? >!8 July @, 1 D

<.4<A.1A /. A.+4<A, +A;A2 A. -48 (A2+188A, J.., and G4=JA;1= +. GA(A..A, petitioners, vs. 7A=. (A3.+ A/ A''4A82, 24(3.1+142 A=- 4_(7A=<4 (A;;1221A= and

JAAS31= 8. ;12A, respondents. /acts5 +he law firm of .A22, 8A6.4=(4, 248'7 and (A..A2(A2A was duly registered in the ;ercantile .egistry and reconstituted with the 2ecurities and 4$change (ommission. +he 24( records show that there were several su#seFuent amendments to the articles of partnership to change the firm TnameU #ut finaly to G1+A, ;12A R 8AIA-A, TJoaFuin 8. ;isaU appellees Jesus G. Gito and ;ariano ;. 8o:ada associated themselves together, as senior partners with respondents-appellees <regorio /. Artega, +omas A. del (astillo, Jr., and Gen*amin Gacorro, as *unior partners. 'etitioner-appellant wrote the respondents-appellees a series of letter stating he is withdrawing and retiring from the firm of Gito, ;isa and 8o:ada, effective at the end of this month, and another letter stating he would li&e to have a meeting with everyone regarding the mechanics of liFuidation, and more particularly, his interest in the two floors of their #uilding. Also, another letter stating the partnership has ceased to #e mutually satisfactory #ecause of the wor&ing conditions their employees including the assistant attorneys. 'etitioner filed with this (ommissionCs 2ecurities 1nvestigation and (learing -epartment (21(-) a petition for dissolution and liFuidation of partnership, praying that the (ommission decree the formal dissolution and order the immediate liFuidation of (the partnership of) Gito, ;isa R 8o:ada9 Arder the respondents to deliver or pay for petitionerCs share in the partnership assets plus the profits, rent or interest attri#uta#le to the use of his right in the assets of the dissolved partnership9 4n*oin respondents from using the firm name of Gito, ;isa R 8o:ada in any of their correspondence, chec&s and pleadings and to pay petitioners damages for the use thereof despite the dissolution of the partnership. 1ssues5 6hether or not the (ourt of Appeals has erred in holding that private respondentCs demand for the dissolution of the partnership so that he can get a physical partition of partnership was not made in #ad faith9 7eld5 6e accord due respect to the appellate court and respondent (ommission on their common factual finding, i.e., that Attorney ;isa did not act in #ad faith. 'u#lic respondents viewed his withdrawal to have #een spurred #y %interpersonal conflict% among the partners. 1t would not #e right, we agree, to let any of the partners remain in the partnership under such an atmosphere of animosity9 certainly, not against their will. 1ndeed, for as long as the reason for withdrawal of a partner is not contrary to the dictates of *ustice and fairness, nor for the purpose of unduly visiting harm and damage

upon the partnership, #ad faith cannot #e said to characteri:e the act. Gad faith, in the conte$t here used, is no different from its normal concept of a conscious and intentional design to do a wrongful act for a dishonest purpose or moral o#liFuity.

E;na"e v CA # M!ta EMI0I% EMNACE( petitioner( vs5 C%-RT %/ APPEA0S( ESTATE %/ 4ICENTE TABANA%( SHER3IN TABANA%( 4ICENTE 3I00IAM TABANA%( $ANETTE TABANA% +EP%S%Y( 4ICENTA MAY TABANA% 4ARE0A( R%SE0A TABANA% and 4INCENT TABANA%( respondents5 G5R5 No5 7)JAA' 3ight to 8ccounting: The right to an account of his interest sha"" accrue to any partner, or his "ega" representative as against the #inding up partners or the surviving partners or the person or partnership continuing the business, at the date of disso"ution, in the absence of any agreement to the contrary. 8pp"ied in re"ation to 8rtic"es )<*( and )<*=, #hich a"so dea" #ith the duty to account, the above;cited provision states that the right to demand an accounting accrues at the date of disso"ution in the absence of any agreement to the contrary. &hen a fina" accounting is made, it is on"y then that prescription begins to run. !n the case at bar, no fina" accounting has been made, and that is precise"y #hat respondents are see>ing in their action before the tria" court, since petitioner has fai"ed or refused to render an accounting of the partnership?s business and assets. @ence, the said action is not barred by prescription. /ACTS, 4milio 4mnace, Jacinto -ivinagracia and Bicente +a#anao formed a partnership engaged in the fishing industry. 1n 1 8", Jacinto decided to leave the partnership hence they agreed to dissolve the partnership. At that time, the partnership has an estimated asset amounting to '@?,???,???.?? 5 7owever, until the death of Bicente +a#anao in 1 !, 'etitioner 4mnace never rendered an accounting either to Bicente or his heirs. 4mnace reneged on his promise to turn over +a#anao,s share, which is 1M@ of the '@?;. (onseFuently, the heirs of +a#anao filed against petitioner an action for accounting, payment of shares, division of assets and damages. 4mnace argued, among others, that the heirs are #arred #y prescription hence they can no longer demand an accounting. 7e contends that the partnership was dissolved in 1 8" and that was the time when +a#anao,s (and his heirs,) right to inFuire into the #usiness affairs accrued9 that said right has e$pired in 1 ? or ! years after. 2o #eyond 1 ?, they can no longer inFuire. Nove;&er )A( )**7

ISS-E, 6hether or not 4mnaceCs contention is correct. HE0+, No5 'rescription has not run in this case, it has not even #egun. +he three final stages of partnership are5 a) dissolution, #) winding up, and c) termination. 1n this case, 4mnace and his partners dissolved their partnership #ut such did not perfect the dissolution #ecause no accounting too& place. +he partnership, although dissolved, continues to e$ist and its legal personality is retained, at which time it completes the winding up of its affairs, including the partitioning and distri#ution of the net partnership assets to the partners. /or as long as the partnership e$ists, any of the partners (or legal representative K in this case the heirs of +a#anao) may demand an accounting of the partnership,s #usiness. 'rescription of the said right starts to run only upon the dissolution of the partnership when the final accounting is done. 6hen a final accounting is made, it is only then that prescription #egins to run. 1n the case at #ar, no final accounting has #een made, and that is precisely what the heirs are see&ing in their action #efore the trial court, since 4mnace has failed or refused to render an accounting of the partnership,s #usiness and assets. 7ence, the said action is not #arred #y prescription. =A+45 3nder Article 18? of the (ivil (ode, right to demand an accounting may also #e invo&ed under certain agreements K these are *ust one of the e$ceptions. <eneral .ule5 Accounting only when there is dissolution. 4$ception5 Article 18?0 and 18? . /ue 8eung v 1A( - Galdr /acts5 -8eung yiu filed a complaint against the petitioner to recover an amount from the annuan profits deried from the operation of sun wah panciteria -the restaurant was registered as a single proprietorship and the permits and licenses were issued in favor of petitioner as the sole proprietor. -8eung yiu adduced evidence during the trial to show that 2un 6ah panciteria was actually a partnership and the fact that he contri#uted !,??? as initial investment. -the petitioner denied having received from the respondent the amount of !,??? issue5 wMn respondent is a partner of the petitioner in 2un 6ah panciteria 7eld5 +he private repondent is a partner of the petitioner. All the reFuisites of a partnership have #een esta#lished. as stated #y yhe respondent, a partner shares not only in profits #ut also in losses of the firm. if e$cellent relations e$ist among the partners at the start of #usiness 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 plausi#le. it would #e incorrect to state that if a partner does not assert his right anytime within 1?

yearrs from the start of operations, such rights are irretrieva#ly 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 as&ing for an accounting of his interest in the partnership. it is art 18!> in connection with art 11!! and 11DD which is applica#le. 18!> provides that5 the right to an account of his interest shall accrue to any partner, or his legal representatives as against the winding up partners of the surviving partners or the person or partnership continuing the #usiness, at the date of dissolution, in the a#sence of any agreement to the contrary. -e la rosa v ortega go-cotay - pat I0+E/%NS% +E 0A R%SA vs5 ENRIC-E %RTEGA G%#C%TAYG5R5 No5 0#)')'A( $an ar! 79( 78)J /A(+2 (hinamen <o-8io and Bicente <o-2engco formed a partnership of purchase and sale of article of commerce in =ueva 4ci*a, during 2panish .egime. <o-8io went to (hina, where he later on died, leaving a widow and three children. 6hen Bicente <o-2engco died his son, defendant 4nriFue Artega <o(otay too& charge of the #usiness. 'laintiff 1ldefonso dela .osa was appointed as administrator of the estate of <o-2engco here in the 'hilippines. As administrator, he reFuested for the winding up of the partnership which was refused #y defendant. 'laintiff filed a complaint for the delivery of the one half of all the property of the partnership and his appointment as receiver of the property. +he (ourt appointed three commissioners to ma&e an inventory and liFuidate all of the property in Fuestion. 1n order to prevent commissioner (a#o-(han from assuming the office of receiver, the defendant filed a #ond. +he court later on adopted the report su#mitted #y commissioner (a#o-(han, wherein it was stated that the partnership incurred losses in the amount of '8 ,? .>>, in view of which the plaintiff has nothing to recover, as their was no profit to divide. 12234 2hould the partnership #ear the losses incurred under the management of defendantE .381=< =o. -efendant Artega <o-(otay assumed complete responsi#ility for the #usiness #y o#*ecting to the appointment of a receiver as prayed for #y plaintiff dela .osa, and #y giving #ond therefore. 7e ceases to #e a managing partner at that time in order to #ecome a receiver and while #efore that date the property was lia#le for his acts, yet that is not the case with his su#seFuent acts. 6ithout *udicial authority he cannot

continue the #usiness of partnership, #eing personally lia#le for the losses. 8iwanag v ca - Jen Car;en 0iGanag v5 CA and People <... =o. 11!@ 8 Acto#er >!, 1 0 Ro;ero( $5 /a"ts, 8iwanag as&ed 1sidora .osales to *oin her and +helma +ag#ilaran in the #usiness of #uyingand selling cigarettes. 3nder their agreement, .osales would give the money needed to#uy the cigarettes while 8iwanag and +a#ligan would act as her agents, with acorresponding !?% commission to her if the goods are sold9 otherwise the money would#e returned to .osales. .osales gave several cash advances amounting to "@@,"D?. ;oney was misappropriated. .osales files a complaint of estafa against them. Iss e, 1. 6A= the parties entered into a partnership agreement9 >. if in the negative, 6A=the transaction is a simple loan Held, 1. =o. 4ven assuming that a contract of partnership was indeed entered into #y and#etween the parties, when money or property have #een received #y a partner for a specificpurpose and he later misappropriated it, such partner is guilty of estafa.>. =o. 1n a contract of loan once the money is received #y the de#tor, ownership over thesame is transferred. Geing the owner, the #orrower can dispose of it for whatever purposehe may deem proper. 4. 8iFuidation and distri#ution of assets _. 8imited partnership A. 7istory G. 2tatutory reFuirements Jo (hung (ang v 'acific (om. (o - civ C%00ECT%R %/ INTERNA0 RE4EN-E( petitioner, vs. $-AN ISASI( M5 SA0-STIANA A0+EC%A( C0A-+I% N-0%AGA( MIREN N-0%AGA( H-G% P5 R%+RIG-EN( and THE C%-RT %/ TAS APPEA0S( respondents 'laintiffs Juan 1sasi, ;. 2alustiana Aldecoa, (laudio Iuloaga, Jr., and ;iren Iuloaga formed a partnership &nown as %Aldecoa, Iuloaga e 1sasi% organi:ed principally for the e$ploitation, development and utili:ation of 7aciendas ;anucao and (onchita, located in the municipalities of Ginal#agan and 7inigaran, =egros, Accidental. +he partnership agreement %4scritura de (onstitucion de la 2ociedad Agricola Aldecoa, Iuloaga e 1sasi% was duly registered on Acto#er >0, 1 !0.

Gelieving that the partnership %Aldecoa, Iuloaga e 1sasi% was a duly registered general co-partnership (sociedad colectiva) and therefore not su#*ect to income ta$ under 2ection >! of the =ational 1nternal .evenue (ode, plaintiffs filed with defendant on July 1", 1 D1, a claim for the refund of '>",80@."" which the partnership had paid as income ta$. +he (1. did not act on the claim, prompting plaintiffs to file a complaint in the (/1 of =egros Accidental for the refund. ((ase was transferred to (+A due to enactment of .A 11>D creating the (+A) +he (1. contends that the partnership is a limited one and not a general one and is therefore ta$a#le as a corporation under the =1.(. (%2ociedad Agricola 7imitada Aldecoa, Iuloaga e 1sasi%, as the partners named their own association seems to have confused the (1.) 122345 6A= the partnership is a limited one (and therefore lia#le for ta$es as a corporation) 748-5 =A. +o esta#lish a limited partnership there must #e at least one general partner and the name of at least one of the general partners must appear in the firm name. (Articles 1>>(>), 1!", 1!8, (ode of (ommerce). 1f these reFuisites are not complied with, the partnership, notwithstanding the fact that the articles of association are entitled %limited partnership% An e$amination of the firm name of the partnership %Aldecoa, Iuloaga e 1sasi% will readily show that neither of this reFuirements have #een fulfilled9 instead it operated under the name of all its mem#ers of some of them, or of only one (without necessarily adding to the name of names stated in last two cases, the words %and company%. A li;ited partnership that has not "o;plied Gith the laG o< its "reation is not "onsidered a li;ited partnership at all( & t a general partnership in Ghi"h all the ;e;&ers are lia&le (7echen, 4lements of 'artnership, p. !1>9 <ilmore, 'artnership, p. ! 9 >? ..(.8. 1?"!). ;oreover, a limited partnership cannot perform any act in the management of the partner interests and cannot even e$amine the condition and state of partnership administration e$cept at stated times. (Articles 1>> (>), 1!8 and 1D?, (ode of (ommerce), unli&e the partnership Aldecoa, Iuloaga e 1sasi, wherein all the partners e$ercised powers of management and administration. 4ven a casual scrutiny of the partnership agreement e$ecuted #y the respondent partners would reveal that they followed the pattern set for the regular co-partnership5 1. +hey have a firm name O Aldecoa, Iuloaga e 1sasi9 that firm name was composed of all the surnames of the partners O to which the words %and company% (to indicate the "imited partnership O Art. 1!" of the (ode of (ommerce) is not addedO >. the management of the firm was entrusted to a partner, -on Juan 1sasi9 @. the contri#ution of a"" the partners was e$pressly provided therein O there #eing no person (ontri#uting a specific amount of capital to a common fund to #ecome lia#le

for the #usiness transactions of the firm e$ecuted e0c"usive"y #y others under a collective name, as is the case in limited partnerships (Art. 1>>, =o. >, (ode of (ommerce)9 !. the duration of the partnership was made to last until June @?, 1 D>9 D. and it allowed its manager, -on Juan 1sasi to engage in the same &ind of underta&ing. 1t is unmista&a#le, notwithstanding the title of the partnership agreement (4scritura de (onstitucion de la 2ociedad Agricola 8imitada Aldecoa, Iuloaga e 1sasi), that the partners intended to organi:e a general partnership under the (ode of (ommerce. Petition dis;issed( Re< nd A<<ir;ed5 7ungman Joc v Vieng-(hiong-2eng - 8eandro /acts5(hua-(he (o, Ju Jec-'in, and Ang (hu Veng were partners of Viong-+iao-4ng, under the firm name Viong-(hiong-2eng. 1t was a mercantile partnership organi:ed for engaging in commercial pursuits, specifically, importation of goodsfor sale here at a profit. 2uch organi:ation was not evidenced #y any pu#lic document as reFuired #y Art. 11 of the (ode of (ommerce,nor was it registered as reFuired #y Art. 10 of the said code. 1t was merely recorded in the 1nternal .evenue office and not in the ;ercantile .egistry. +he agent Ju Jec 'in himself and some of his so-called partners have merely noted in the #oo&s of the partnership, the capital which each had contri#uted. +he name was considered as the designation of the partnership and was not proved to #e the firm name.+he (/1 of ;anila rendered a *udgment for a sum of money against each and all of the defendant partners for 0, ">.1! pesos. (hu-(he-(o is the only one who appealed Fuestioning his lia#ility. !ssue 5 6hether or not (hu-(he-(o can #e held lia#le to pay the amount together with the other defendants. @e"d: =o. 7e is a#solved. (hu-(he-(o has incurred no lia#ility and cannot #e held individually responsi#le for the payment of the plaintiff,s claims. 3atio: /irm =ame5 o Vieng-(hiong-2eng cannot #e the firm name of a general partnership. o /irm names should contain the names of all the partners, or at least one of them to #e, followed in two latter cases #y the words Hand company). o An this case, none of the four names appear in the firm name. o =either can it #e considered as the firm name of a limited partnership9 this should contain the same reFuisites as the firm name of a general partnership, and in addition thereto the word Hlimited). Anonymous partnerships (corporations) do not reFuire a firm name or signature9 a designation adeFuate,for the o#*ect or o#*ects of the #usiness to which it is dedicated, is sufficient9 however ]+he alleged partnership never had any legal e$istence nor has it acFuired any *uridical

personality in the acts and contracts e$ecuted and made #y it. ]1t is a partnership de facto and the lia#ility arising from the o#ligations it contracted with third parties must #e enforcea#le against someone despite its lac& of *uridical personality. ]+he general provisions applica#le to all partnerships in Art. 1>? shall #e applied5 +he persons in charge of the management of the association who do not comply with the reFuirements of recording the articles of general partnership in the pu#lic instrument and registration in the ;ercantile .egister shall #e responsi#le together with the persons not mem#ers of the association with whom they may have transacted #usiness in the name of the same.(hu-(he-(o was not in charge of the management of the association nor did he contract with the plaintiffs.+he agent of the partnership, #eing the person who made all the contracts of the partnership9 also Vieng-+iao-4ng are the ones lia#le to plaintiffs.