Belo V Ca

William Belo introduced Nenita Anay to his girlfriend, Marjorie Tocao. The three
agreed to form a joint venture for the sale of cooking wares. Belo was to contribute
P2.5 million; Tocao also contributed some cash and she shall also act as president
and general manager; and Anay shall be in charge of marketing. Belo and Tocao
specifically asked Anay because of her experience and connections as a marketer.
They agreed further that Anay shall receive the following:
1.

10% share of annual net profits

2.

6% overriding commission for weekly sales

3.

30% of sales Anay will make herself

4.

2% share for her demo services

They operated under the name Geminesse Enterprise, this name was however
registered as a sole proprietorship with the Bureau of Domestic Trade under
Tocao. The joint venture agreement was not reduced to writing because Anay
trusted Belos assurances.
The venture succeeded under Anays marketing prowess.
But then the relationship between Anay and Tocao soured. One day, Tocao advised
one of the branch managers that Anay was no longer a part of the company. Anay
then demanded that the company be audited and her shares be given to her.
ISSUE: Whether or not there is a partnership.
HELD: Yes, even though it was not reduced to writing, for a partnership can be
instituted in any form. The fact that it was registered as a sole proprietorship is of
no moment for such registration was only for the companys trade name.
Anay was not even an employee because when they ventured into the agreement,
they explicitly agreed to profit sharing this is even though Anay was receiving
commissions because this is only incidental to her efforts as a head marketer.
The Supreme Court also noted that a partner who is excluded wrongfully from a
partnership is an innocent partner. Hence, the guilty partner must give him his due
upon the dissolution of the partnership as well as damages or share in the profits
realized from the appropriation of the partnership business and goodwill. An
innocent partner thus possesses pecuniary interest in every existing contract that

was incomplete and in the trade name of the co-partnership and assets at the time
he was wrongfully expelled.
An unjustified dissolution by a partner can subject him to action for damages
because by the mutual agency that arises in a partnership, the doctrine of delectus
personae allows

the

partners

to

have

thepower, although

not

necessarily

the right to dissolve the partnership.

Tocaos unilateral exclusion of Anay from the partnership is shown by her memo to
the Cubao office plainly stating that Anay was, as of October 9, 1987, no longer the
vice-president for sales of Geminesse Enterprise. By that memo, petitioner Tocao
effected her own withdrawal from the partnership and considered herself as
having ceased to be associated with the partnership in the carrying on of the
business. Nevertheless, the partnership was not terminated thereby; it continues
until the winding up of the business.

Tocao V Ca 2001
NOTE: Motion for Reconsideration filed by Tocao and Belo decided by the SC on
September 20, 2001.
Belo is not a partner. Anay was not able to prove that Belo in fact received profits
from the company. Belo merely acted as a guarantor. His participation in the
business meetings was not as a partner but as a guarantor. He in fact had only
limited partnership. Tocao also testified that Belo received nothing from the
profits. The Supreme Court also noted that the partnership was yet to be
registered in the Securities and Exchange Commission. As such, it was
understandable that Belo, who was after all petitioner Tocaos good friend and
confidante, would occasionally participate in the affairs of the business, although
never in a formal or official capacity.

TORRES v CA
In 1969, sisters Antonia Torres and Emeteria Baring entered into a joint venture
agreement with Manuel Torres. Under the agreement, the sisters agreed to
execute a deed of sale in favor Manuel over a parcel of land, the sisters received no
cash payment from Manuel but the promise of profits (60% for the sisters and 40%
for Manuel) said parcel of land is to be developed as a subdivision.
Manuel then had the title of the land transferred in his name and he subsequently
mortgaged the property. He used the proceeds from the mortgage to start building
roads, curbs and gutters. Manuel also contracted an engineering firm for the
building of housing units. But due to adverse claims in the land, prospective buyers
were scared off and the subdivision project eventually failed.
The sisters then filed a civil case against Manuel for damages equivalent to 60% of
the value of the property, which according to the sisters, is whats due them as per
the contract.
The lower court ruled in favor of Manuel and the Court of Appeals affirmed the
lower court.
The sisters then appealed before the Supreme Court where they argued that there
is no partnership between them and Manuel because the joint venture agreement
is void.
ISSUE: Whether or not there exists a partnership.

HELD: Yes. The joint venture agreement the sisters entered into with Manuel is a
partnership agreement whereby they agreed to contribute property (their land)
which was to be developed as a subdivision. While on the other hand, though
Manuel did not contribute capital, he is an industrial partner for his contribution
for general expenses and other costs. Furthermore, the income from the said
project would be divided according to the stipulated percentage (60-40). Clearly,
the contract manifested the intention of the parties to form a partnership. Further
still, the sisters cannot invoke their right to the 60% value of the property and at
the same time deny the same contract which entitles them to it.
At any rate, the failure of the partnership cannot be blamed on the sisters, nor can
it be blamed to Manuel (the sisters on their appeal did not show evidence as to
Manuels fault in the failure of the partnership). The sisters must then bear their
loss (which is 60%). Manuel does not bear the loss of the other 40% because as an
industrial partner he is exempt from losses.

Lim Tong Lim v Phil Fishing Gear

It was established that Lim Tong Lim requested Peter Yao to engage in commercial
fishing with him and one Antonio Chua. The three agreed to purchase two fishing
boats but since they do not have the money they borrowed from one Jesus Lim
(brother of Lim Tong Lim). They again borrowed money and they agreed to
purchase fishing nets and other fishing equipments. Now, Yao and Chua
represented themselves as acting in behalf of Ocean Quest Fishing Corporation
(OQFC) they contracted with Philippine Fishing Gear Industries (PFGI) for the
purchase of fishing nets amounting to more than P500k.
They were however unable to pay PFGI and so they were sued in their own names
because apparently OQFC is a non-existent corporation. Chua admitted liability

and asked for some time to pay. Yao waived his rights. Lim Tong Lim however
argued that hes not liable because he was not aware that Chua and Yao
represented themselves as a corporation; that the two acted without his knowledge
and consent.
ISSUE: Whether or not Lim Tong Lim is liable.
HELD: Yes. From the factual findings of both lower courts, it is clear that Chua,
Yao and Lim had decided to engage in a fishing business, which they started by
buying boats worth P3.35 million, financed by a loan secured from Jesus Lim. In
their Compromise Agreement, they subsequently revealed their intention to pay
the loan with the proceeds of the sale of the boats, and to divide equally among
them the excess or loss. These boats, the purchase and the repair of which were
financed with borrowed money, fell under the term common fund under Article
1767. The contribution to such fund need not be cash or fixed assets; it could be an
intangible like credit or industry. That the parties agreed that any loss or profit
from the sale and operation of the boats would be divided equally among them also
shows that they had indeed formed a partnership.
Lim Tong Lim cannot argue that the principle of corporation by estoppels can only
be imputed to Yao and Chua. Unquestionably, Lim Tong Lim benefited from the use
of the nets found in his boats, the boat which has earlier been proven to be an
asset of the partnership. Lim, Chua and Yao decided to form a corporation.
Although it was never legally formed for unknown reasons, this fact alone does not
preclude the liabilities of the three as contracting parties in representation of it.
Clearly, under the law on estoppel, those acting on behalf of a corporation and
those benefited by it, knowing it to be without valid existence, are held liable as
general partners.

Jarantilla Jr v Jarantilla

FACTS:
The spouses Andres Jarantilla and FelisaJaleco were survived by eight children:
Federico Sr., Delfin, Benjamin, Conchita, Rosita, Pacita, Rafael and Antonieta.
Petitioner Federico Jarantilla, Jr. is the grandchild of the late Jarantilla spouses by
their son Federico Jarantilla, Sr. and his wife Leda Jamili. Petitioner also has two
other
brothers:
Doroteo
and
Tomas
Jarantilla.
The Jarantilla heirs extrajudicially partitioned amongst themselves the real
properties of their deceased parents. With the exception of the real property
adjudicated to PacitaJarantilla, the heirs also agreed to allot the produce of the
said real properties for the years 1947-1949 for the studies of Rafael and
AntonietaJarantilla.
Sps. Rosita Jarantilla and Vivencio Deocampo entered into an agreement with the
spouses Buenaventura Remotigue and ConchitaJarantilla to provide mutual
assistance to each other by way of financial support to any commercial and
agricultural activity on a joint business arrangement. This proved to be successful
as they were able to establish a manufacturing and trading business, acquire real
properties, and construct buildings, among other things. The same ended in 1973
upon
their
voluntary
dissolution.
The spouses Buenaventura and ConchitaRemotigue executed a document
Acknowledgement of Participating Capital stating the participating capital of of
their co-owners as of the year 1952, with AntonietaJarantillas stated as eight
thousand pesos (P8,000.00) and Federico Jarantilla, Jr.s as five thousand pesos
(P5,000.00).
The controversy started when Antonieta filed a complaint against Buenaventura,
Cynthia, Doroteo and Tomas, for the accounting of the assets and income of the coownership, for its partition and the delivery of her share corresponding to eight
percent (8%), and for damages. She alleged that the initial contribution of property
and money came from the heirs inheritance, and her subsequent annual
investment of seven thousand five hundred pesos (P7,500.00) as additional capital
came
from
the
proceeds
of
her
farm.
Respondents denied having formed a partnership. They did not deny the existence
and validity of the "Acknowledgement of Participating Capital" and in fact used this
as evidence to support their claim that Antonietas 8% share was limited to the
businesses enumerated therein. Petitioner Federico Jr joined his aunt Antonieta
and
likewise
asserted
his
share
in
the
supposed
partnership.
The RTC rendered judgment in favor of Antonieta and Federico. On appeal, the CA
set the RTC Decision. Petitioner filed a petition for review to the SC.

ISSUE: Whether or not the CA erred in ruling that petitioners are not entitled to
profits
over
the
businesses
not
listed
in
the
Acknowledgement

HELD:

No.

CA

Decision

Affirmed

CIVIL LAW- There is a co-ownership when an undivided thing or right belongs to

different persons. It is a partnership when two or more persons bind themselves to
contribute money, property, or industry to a common fund, with the intention of
dividing
the
profits
among
themselves.
CIVIL LAW- The common ownership of property does not itself create a partnership
between the owners, though they may use it for the purpose of making gains; and
they may, without becoming partners, agree among themselves as to the
management, and use of such property and the application of the proceeds
therefrom.
Under Article 1767 of the Civil Code, there are two essential elements in a contract
of partnership: (a) an agreement to contribute money, property or industry to a
common fund; and (b) intent to divide the profits among the contracting parties.
It is not denied that all the parties in this case have agreed to contribute capital to
a common fund to be able to later on share its profits. They have admitted this fact,
agreed to its veracity, and even submitted one common documentary evidence to
prove such partnership - the Acknowledgement of Participating Capital.
The Acknowledgement of Participating Capital is a duly notarized document
voluntarily executed by Conchita Jarantilla-Remotigue and Buenaventura
Remotigue in 1957. Petitioner does not dispute its contents and is actually relying
on it to prove his participation in the partnership. Article 1797 of the Civil Code
provides:
Art. 1797. The losses and profits shall be distributed in conformity with the
agreement. If only the share of each partner in the profits has been agreed upon,
the share of each in the losses shall be in the same proportion.
In the absence of stipulation, the share of each partner in the profits and losses
shall be in proportion to what he may have contributed, but the industrial partner
shall
not
be
liable
for
the
losses.

The petitioner himself claims his share to be 6%, as stated in the

Acknowledgement of Participating Capital. However, petitioner fails to realize that
this document specifically enumerated the businesses covered by the partnership:
Manila Athletic Supply, Remotigue Trading in Iloilo City and Remotigue Trading in
Cotabato City. Since there was a clear agreement that the capital the partners
contributed went to the three businesses, then there is no reason to deviate from
such agreement and go beyond the stipulations in the document. Therefore, the
Court of Appeals did not err in limiting petitioners share to the assets of the
businesses enumerated in the Acknowledgement of Participating Capital.
In Villareal v. Ramirez, the Court held that since a partnership is a separate
juridical entity, the shares to be paid out to the partners is necessarily limited only
to
its
total
resources.

CIVIL

LAW-

express

and

implied

trust

The petitioner further asserts that he is entitled to respondents properties based

on the concept of trust. He claims that since the subject real properties were
purchased using funds of the partnership, wherein he has a 6% share, then "law
and equity mandates that he should be considered as a co-owner of those
properties
in
such
proportion."
As a rule, the burden of proving the existence of a trust is on the party asserting its
existence, and such proof must be clear and satisfactorily show the existence of the
trust and its elements. While implied trusts may be proved by oral evidence, the
evidence must be trustworthy and received by the courts with extreme caution,
and should not be made to rest on loose, equivocal or indefinite declarations.
Trustworthy evidence is required because oral evidence can easily be fabricated.
The petitioner has failed to prove that there exists a trust over the subject real
properties. Aside from his bare allegations, he has failed to show that the
respondents used the partnerships money to purchase the said properties. Even
assuming arguendo that some partnership income was used to acquire these
properties, the petitioner should have successfully shown that these funds came
from his share in the partnership profits. After all, by his own admission, and as
stated in the Acknowledgement of Participating Capital, he owned a mere 6%
equity
in
the
partnership.
DENIED.

Heirs of Jose Lim v Lim

In 1980, the heirs of Jose Lim alleged that Jose Lim entered into a partnership
agreement with Jimmy Yu and Norberto Uy. The three contributed P50,000.00 each
and used the funds to purchase a truck to start their trucking business. A year
later however, Jose Lim died. The eldest son of Jose Lim, Elfledo Lim, took over the
trucking business and under his management, the trucking business prospered.
Elfledo was able to but real properties in his name. From one truck, he increased it
to 9 trucks, all trucks were in his name however. He also acquired other motor
vehicles in his name.
In 1993, Norberto Uy was killed. In 1995, Elfledo Lim died of a heart attack.
Elfledos wife, Juliet Lim, took over the properties but she intimated to Jimmy and
the heirs of Norberto that she could not go on with the business. So the properties
in the partnership were divided among them.
Now the other heirs of Jose Lim, represented by Elenito Lim, required Juliet to do
an accounting of all income, profits, and properties from the estate of Elfledo Lim
as they claimed that they are co-owners thereof. Juliet refused hence they sued her.

The heirs of Jose Lim argued that Elfledo Lim acquired his properties from the
partnership that Jose Lim formed with Norberto and Jimmy. In court, Jimmy Yu
testified that Jose Lim was the partner and not Elfledo Lim. The heirs testified that
Elfledo was merely the driver of Jose Lim.
ISSUE: Who is the partner between Jose Lim and Elfledo Lim?
HELD: It is Elfledo Lim based on the evidence presented regardless of Jimmy Yus
testimony in court that Jose Lim was the partner. If Jose Lim was the partner, then
the partnership would have been dissolved upon his death (in fact, though the SC
did not say so, I believe it should have been dissolved upon Norbertos death in
1993). A partnership is dissolved upon the death of the partner.

Further, no

evidence was presented as to the articles of partnership or contract of partnership

between Jose, Norberto and Jimmy. Unfortunately, there is none in this case,
because the alleged partnership was never formally organized.
But at any rate, the Supreme Court noted that based on the functions performed
by Elfledo, he is the actual partner.
The following circumstances tend to prove that Elfledo was himself the partner of
Jimmy and Norberto:
1.) Cresencia testified that Jose gave Elfledo P50,000.00, as share in the
partnership, on a date that coincided with the payment of the initial capital in the
partnership;
2.) Elfledo ran the affairs of the partnership, wielding absolute control, power and
authority, without any intervention or opposition whatsoever from any of
petitioners herein;
3.) all of the properties, particularly the nine trucks of the partnership, were
registered in the name of Elfledo;
4.) Jimmy testified that Elfledo did not receive wages or salaries from the
partnership, indicating that what he actually received were shares of the profits of
the business; and
5.) none of the heirs of Jose, the alleged partner, demanded periodic accounting
from Elfledo during his lifetime. As repeatedly stressed in the case of Heirs of Tan
Eng Kee, a demand for periodic accounting is evidence of a partnership.

Furthermore, petitioners failed to adduce any evidence to show that the real and
personal properties acquired and registered in the names of Elfledo and Juliet
formed part of the estate of Jose, having been derived from Joses alleged
partnership with Jimmy and Norberto.
Elfledo was not just a hired help but one of the partners in the trucking business,
active and visible in the running of its affairs from day one until this ceased
operations upon his demise. The extent of his control, administration and
management of the partnership and its business, the fact that its properties were
placed in his name, and that he was not paid salary or other compensation by the
partners, are indicative of the fact that Elfledo was a partner and a controlling one
at that. It is apparent that the other partners only contributed in the initial capital
but had no say thereafter on how the business was ran. Evidently it was through
Elfredos efforts and hard work that the partnership was able to acquire more
trucks and otherwise prosper. Even the appellant participated in the affairs of the
partnership by acting as the bookkeeper sans salary.

Philex Mining Corp V Comm of Internal Revenue

Facts: Petitioner Philex entered into an agreement with Baguio Gold Mining
Corporation for the former to manage the latters mining claim know as the Sto.
Mine. The parties agreement was denominated as Power of Attorney. The mine
suffered continuing losses over the years, which resulted in petitioners withdrawal
as manager of the mine. The parties executed a Compromise Dation in Payment,
wherein
the
debt
of
Baguio
amounted
to
Php.
112,136,000.00.
Petitioner deducted said amount from its gross income in its annual tax income
return as loss on the settlement of receivables from Baguio Gold against reserves
and allowances. BIR disallowed the amount as deduction for bad debt. Petitioner
claims that it entered a contract of agency evidenced by the power of attorney
executed by them and the advances made by petitioners is in the nature of a loan
and thus can be deducted from its gross income. Court of Tax Appeals (CTA)
rejected the claim and held that it is a partnership rather than an agency. CA
affirmed CTA
Issue: Whether or not it is an agency.
Held: No. The lower courts correctly held that the Power of Attorney (PA) is the
instrument material that is material in determining the true nature of the business
relationship between petitioner and Baguio. An examination of the said PA reveals
that a partnership or joint venture was indeed intended by the parties. While a
corporation like the petitioner cannot generally enter into acontract of
partnership unless authorized by law or its charter, it has been held that it may
enter into a joint venture, which is akin to a particular partnership. The PA
indicates that the parties had intended to create a PAT and establish a common
fund for the purpose. They also had a joint interest in the profits of the business as
shown by the 50-50 sharing of income of the mine.
Moreover, in an agency coupled with interest, it is the agency that cannot be
revoked or withdrawn by the principal due to an interest of a third party that
depends upon it or the mutual interest of both principal and agent. In this case the
non-revocation or non-withdrawal under the PA applies to the advances made by
the petitioner who is the agent and not the principal under the contract. Thus, it
cannot be inferred from the stipulation that it is an agency.

Santos V Spouses Reyes

In June 1986, Fernando Santos (70%), Nieves Reyes (15%), and Melton Zabat
(15%) orally instituted a partnership with them as partners. Their venture is to set
up a lending business where it was agreed that Santos shall be financier and that
Nieves and Zabat shall contribute their industry. **The percentages after their
names denote their share in the profit.Later, Nieves introduced Cesar Gragera to
Santos. Gragera was the chairman of a corporation. It was agreed that the
partnership shall provide loans to the employees of Grageras corporation and
Gragera shall earn commission from loan payments.In August 1986, the three
partners put into writing their verbal agreement to form the partnership. As earlier
agreed, Santos shall finance and Nieves shall do the daily cash flow more
particularly from their dealings with Gragera, Zabat on the other hand shall be a
loan investigator. But then later, Nieves and Santos found out that Zabat was
engaged in another lending business which competes with their partnership hence
Zabat was expelled.The two continued with the partnership and they took with
them Nieves husband, Arsenio, who became their loan investigator.
Later, Santos accused the spouses of not remitting Grageras commissions to the
latter. He sued them for collection of sum of money. The spouses countered that
Santos merely filed the complaint because he did not want the spouses to get their
shares in the profits. Santos argued that the spouses, insofar as the dealing with
Gragera is concerned, are merely his employees. Santos alleged that there is a
distinct partnership between him and Gragera which is separate from the
partnership formed between him, Zabat and Nieves.
The trial court as well as the Court of Appeals ruled against Santos and ordered
the latter to pay the shares of the spouses.
ISSUE: Whether or not the spouses are partners.

HELD: Yes. Though it is true that the original partnership between Zabat, Santos
and Nieves was terminated when Zabat was expelled, the said partnership was
however considered continued when Nieves and Santos continued engaging as
usual in the lending business even getting Nieves husband, who resigned from the
Asian Development Bank, to be their loan investigator who, in effect, substituted
Zabat.
There is no separate partnership between Santos and Gragera. The latter being
merely a commission agent of the partnership. This is even though the partnership
was formalized shortly after Gragera met with Santos (Note that Nieves was even
the one who introduced Gragera to Santos exactly for the purpose of setting up a
lending agreement between the corporation and the partnership).
HOWEVER, the order of the Court of Appeals directing Santos to give the spouses
their shares in the profit is premature. The accounting made by the trial court is
based on the total income of the partnership. Such total income calculated by the
trial court did not consider the expenses sustained by the partnership. All expenses
incurred by the money-lending enterprise of the parties must first be deducted
from the total income in order to arrive at the net profit of the partnership. The
share of each one of them should be based on this net profit and not from the
gross income or total income.