Heirs of Lim v Lim (2010)
evidence may be sufficient especially when the partnership
DOCTRINE OF THE CASE: A partnership exists when two or
more persons agree to place their money, effects, labor, and
skill in lawful commerce or business, with the understanding
that there shall be proportionate sharing of the profits and
losses among them. Article 1769* of the New Civil Code
enumerated the rules that shall apply in determining whether or
not a partnership exists.
Facts: Petitioners are the heirs of late Jose Lim who had
filed a complaint for Partition, Accounting and Damages
against respondent Juliet Villa Lim, the widow of the late
Elfredo Lim, the eldest son of Jose Lim and Cresencia.
The basis of the complaint of the petitioners are as
follows:
1. Jose together with his friends Jimmy Yu and Norberto
Uy formed a partnership to engage in the trucking business.
The partners initially contributed P50,000 each to purchase
trucks to be used in the hauling and transport of lumber. Jose
managed the partnership until his death and thereafter Joses
heir and the partners agreed to continue the business under
the management of Elfredo Lim.
2. Petitioners alleged that Elfredo was never a partner
nor an investor but he merely supervised the business. By the
time the partnership ceased, it had nine (9) trucks, all of which
were registered in Elfredos name. Petitioners further alleged
that because of the management of Elfredo, the latter was able
to purchase numerous real properties by using the profits of
the business.
3. Petitioners claimed that respondent took over the
administration of the properties upon the death of Elfredo,
wherein they alleged to belong to the estate of Jose being the
true partner of the business. They further claim that they are
co-owners of the properties thus the prayer for accounting and
the administration of the property.
Respondent rebutted the petitioners claim by alleging
that:
1. Per testimony of Cresencia Lim, Jose gave Elfredo
P50,000 as the latters capital in the informal partnership.
2. It is through the effort of Elfredo that the business
flourished and that other than the trucking business, Elfredo
and his wife were also engaged in other business ventures.
3. That when the trucking business stated to falter, 3 out
of nine trucks were given to Elfredo as his share and the rest
were sold to Elfredo as well.
4. When Jose died, he left no known assets and he had
left no properties that Elfredo could have held in trust.
5. That all the properties in this case were acquired
through their own effort and because they are conjugal
properties, she had the right to refuse to render an accounting
of their own business.
Issue: Whether or not Elfredo Lim was a partner of the
partnership and not Jose Lim. YES
Held: While the best evidence of the existence of a
partnership would have been the contract of partnership of the
1
articles of partnership, other documentary and testimonial
was never formally organized. Here, petitioners relied solely in
the testimony of Jimmy that Elfredo was not a partner
However, petitioners fall short to establish that: 1) Jose was the
partner; and 2) all the properties acquired by Elfredo and his
wife form part of the estate of Jose having been derived from
the alleged partnership.
Applying the provision of Article 1769 of the NCC, the
following circumstances tend to prove that Elfredo was the
partner and not Jose:
(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 petitioners, as heirs of Jose, the alleged
partner, demanded periodic accounting from Elfledoduring his
lifetime. Accordingly, 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 respondent formed part of the estate
of Jose, having been derived from Jose's alleged partnership
with Jimmy and Norberto.
WHEREFORE, the instant Petition is DENIED. The assailed
Court of Appeals Decision dated June 29, 2005 is AFFIRMED.
Costs against petitioners.SO ORDERED.
Marsman Drysdale Land Inc. v Philippine Geoanalytics,
Inc. (2010)
DOCTRINE OF THE CASE: A Joint Venture Agreement could
not affect third persons because of the basic civil law principle
of relativity of contracts which provides that contracts can only
bind the parties who entered into it and it cannot favor of
prejudice a third person even if he is aware of such contract
and has acted with knowledge thereof. Further, a joint venture
being a form of partnership, it is to be governed by the laws on
partnership.
Facts: On February 12, 1997, Marsman Drysdale Land
Inc. (Marsman) and Gotesco Properties, Inc. (Gotesco)
entered into a Joint Venture Agreement (JVA) for the
construction and development of an office building on a land
owned by Marsman Drysdale. Under the JVA, the parties shall
invest on a 50-50 basis, with Marsman to contribute the land
valued at P420,000,000.00 to be delivered in a buildable
condition and with Gotesco to contribute the amount of
P420,000,000,00 to fund the project building. Further, the JVA
states that all funds advanced by the party shall be repaid by
the JV.
Thereafter the JVA engaged the services of Philippine
Geoanalytics, Inc.(PGI) to provide soil exploration, laboratory
testing, seismic study and geotechnical engineering for the
project. Despite the failure of the JV partners to clear the area
where the drilling was to be made, PGI was able to complete
its seismic study. PGI billed the JV for the amount of
P284,553.50 and P250,800.00 but the JV failed to pay its
obligations until the same was cut short and the planned
building was eventually shelved. PGI filed a complaint for
collection of sum of money against the JV partners but
Marsman passed the responsibility to Gotesco alleging that the
latter was solely liable for he monetary expenses of the project.
Gotesco claimed however that PGI had no cause of action
because PGI had yet to complete the services and that
Marsman is the one who failed to clear the property of debris
which prevented PGI from competing its work.
Issue: Whether or not Gotesco is the one who is solely liable
to PGI. NO
Held: The court finds Marsman and Gotesco jointly liable
to PGI. While PGI entered into a technical service contract with
the joint venture, it was not a party to the JVA. Thus, while the
JVA spelled out the capital contribution of Marsman (land) and
Gotesco (cash) as well as the funding and financing
mechanism, the same cannot be used to defeat the lawful
claim of PGI against the two joint venturers-partners.A Joint
Venture Agreement could not affect third persons because of
the basic civil law principle of relativity of contracts which
provides that contracts can only bind the parties who entered
into it and it cannot favor of prejudice a third person even if he
is aware of such contract and has acted with knowledge
thereof.
As to their liabilities, Articles 1207 and 1208 of the NCC
shall apply and their liability shall be presumed joint (1207: The
concurrence of two or more creditors or of two or more debtors
does not imply solidary obligation; 1208: The credit or debt
shall be presumed to be divided into as many equal share as
there are creditors and debtors). Further, Article 1797 shall
apply, because a joint venture being a form of corporation is to
be governed by the laws on partnership. Accordingly, the
losses and profit shall be distributed in conformity with the
agreement, and in the absence of stipulation, the share of each
shall be in proportion to what he may have contributed with the
exception of an industrial partner who shall not be liable to
losses.
In the JVA, Marman and Gotesco agreed on a 50-50 ratio
on the proceeds which shall also be applied in splitting the
obligation-loss of the joint venture as provided by Article 1797.
In conclusion, Marsman and Gotesco shall be jointly liable and
the decision of the appellate court for Gotesco to reimburse
Marsman for 50% of the aggregate sum due to PGI shall be
deleted.
WHEREFORE, the assailed Decision and Resolution of the
Court of Appeals are AFFIRMED with MODIFICATION in that
the order for Gotesco to reimburse Marsman Drysdale
is DELETED.
Jarantilla, Jr. v Jarantilla (2010)
2
DOCTRINE OF THE CASE:Since it is the partnership, as a
separate and distinct entity, that must refund the shares of
the partners, the amount to be refunded is necessarily limited
to its total resources. In other words, it can only pay out what it
has in its coffers, which consists of all its assets.
Facts: On April 29, 1957, the spouses Buenaventura and
ConchitaRemotigue executed a document wherein they
acknowledged that while registered only in Buenaventura
Remotigues name, they were not the only owners of the
capital of the businesses Manila Athletic Supply, Remotigue
Trading (Iloilo City), and Remotigue Trading (Cotabato City). In
the same Acknowledgement of Participating Capital, they
stated the participating capital of their co-owners, with
AntonietaJarantillas stated as P8,000.00 and Federico
Jarantilla, Jr.s as P5,000.00.
On April 22, 1987, AntonietaJarantilla filed a complaint
against BuenaventuraRemotigue, Cynthia Remotigue,
Federico Jarantilla, Jr., DoroteoJarantilla and Tomas Jarantilla,
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 1946, she had entered into an
agreement with Conchita and Buenaventura Remotigue,
Rafael Jarantilla, and Rosita and Vivencio Deocampo to
engage in business. Antonieta also alleged that from 1946-
1969, she had helped in the management of the business they
co-owned without receiving any salary. Her salary was
supposedly rolled back into the business as additional
investments in her behalf. Antonieta further claimed co-
ownership of certain properties (the subject 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.
Respondent denied having formed the partnership and
alleged that Antonietas share should be limited to the
businesses enumerated therein and with regard to her claim in
their other corporations should be limited to the number of
shares as specified in the respective articles of incorporation.
During the course of the trial at the RTC, Federico Jarantilla,
Jr. entered into a compromise agreement with
AntonietaJarantilla and therefore claimed 6% of the supposed
partnership in the same manner as Antonietta was. The RTC
only granted the petition of Antonietta wherein Federico
appealed. The CA however modified the RTCs decision
limiting the share of Antonieta and Federico, respectively, only
to the assets and profits of the enterprises mentioned in the
Acknowledgement of Participating Capital.
Issue: 1. Whether or not a partnership was formed YES
2. Whether or not the CA erred on modifying the RTCs
decision NO
3. Whether or not petitioner is entitled to respondents
properties based on the concept of trust NO
Held: 1. Both the petitioner and Anotnieta characterized their
relationship with the respondents as a co-ownership and thus
the assert that a verbal partnership was formed. However,
those who agree to form a co-ownership who share or do not
share any profits made by the use of the property does not
automatically convert the venture into a partnership. Nor does
the sharing of gross returns ipso facto establish a partnership.
Other elements constituting a partnership is necessary, such
as the clear intent to form a partnership, the existence of a
separate and distinct juridical personality, and the freedom to
transfer or assign any interest in the property by one with the
consent of the others. In the present case, it is not denied that
all the parties agreed to contribute capital to be able to later on
hare its profits as evidenced by the Acknowledgement of
Participating Capital.
2. The Acknowledgement of Participating Capital is a duly
notarized document voluntarily executed by ConchitaJarantilla-
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.
It is clear from Article 1797 of the NCC that a partner is
entitled only to his share as agreed upon, or in the absence of
any such stipulations, then to his share in proportion to his
contribution to the partnership. 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.
3.Petitioner 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. The assertion has no merit. 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.
WHEREFORE, the Petition is hereby DENIED and the
Decision of the Court of Appeals in CA-G.R. CV No. 40887,
dated July 30, 2002 is AFFIRMED.
Wolfgang Aurbach v Sanitary Wares Manufacturing
Corporation (1989)
DOCTRINE OF THE CASE:Under Philippine Law, a joint
venture is a form or partnership and should be governed by the
law or partnerships.
Facts: In 1961, a domestic corporation Saniwares,
through one of its incorporators Baldwin Young and some
Filipino investors entered into an agreement with ASI, a foreign
corporation domiciled in Delaware. ASI and the Filipino
3
investors agreed to participate in the ownership of an
enterprise which would engage primarily in the business of
manufacturing in the Philippines and selling here and abroad
vitreous china and sanitary wares.
The Agreement has the following provisions relevant to
the issues in these cases on the nomination and election of the
directors of the corporation:
3. Articles of Incorporation
(a) The Articles of Incorporation of the Corporation shall
be substantially in the form annexed hereto as Exhibit A and,
insofar as permitted under Philippine law, shall specifically
provide for
(1) Cumulative voting for directors:
5. Management
(a) The management of the Corporation shall be vested
in a Board of Directors, which shall consist of nine individuals.
As long as American-Standard shall own at least 30% of the
outstanding stock of the Corporation, three of the nine directors
shall be designated by American-Standard, and the other six
shall be designated by the other stockholders of the
Corporation.
On March 8, 1983, the annual stockholders meeting was
held. The ASI group nominated three persons namely;
Wolfgang Aurbach, John Griffin and David P. Whittingham. The
Philippine investors nominated six, namely; Ernesto
Lagdameo, Sr., Raul A. Boncan, Ernesto R. Lagdameo, Jr.,
George F. Lee, and Baldwin Young. Mr. Eduardo R, Ceniza
then nominated Mr. Luciano E. Salazar, who in turn nominated
Mr. Charles Chamsay. The chairman, Baldwin Young ruled the
last two nominations out of order on the basis of section 5 (a)
of the Agreement. Mr. Jaqua protested the decision of the
Chairmanand announced that all votes accruing to ASI shares,
a total of 1,329,695 were being cumulatively voted for the three
ASI nominees and Charles Chamsay, and instructed the
Secretary to so vote. Luciano E. Salazar and other proxy
holders announced that all the votes owned by and or
represented by them 467,197 shares were being voted
cumulatively in favor of Luciano E. Salazar. The Chairman,
Baldwin Young, nevertheless instructed the Secretary to cast
all votes equally in favor of the three ASI nominees and the six
originally nominated by Rogelio Vinluan. The Secretary then
certified for the election of the original nominee.
The ASI Group, Luciano E. Salazar and other
stockholders decided to continue the meeting at the elevator
lobby. On the basis of the cumulative votes cast earlier in the
meeting, the ASI Group nominated its four nominees;
Wolfgang Aurbach, John Griffin, David Whittingham and
Charles Chamsay. Luciano E. Salazar voted for himself, thus
the said five directors were certified as elected directors by the
Acting Secretary.
The ASI Group and petitioner Salazar, alleged that the
ASI Group has the right to vote their additional equity pursuant
to Section 24 of the Corporation Code which gives the
stockholders of a corporation the right to cumulate their votes
in electing directors. Petitioner Salazar adds that this right if
granted to the ASI Group would not necessarily mean a
violation of the Anti-Dummy Act. He cites section 2-a thereof
which provides:
And provided finally that the election of aliens as members of
the board of directors or governing body of corporations or
associations engaging in partially nationalized activities shall
be allowed in proportion to their allowable participation or
share in the capital of such entities.
Issue: 1. Whether or not the parties formed a joint venture or a
corporation JOINT VENTURE
2. Whether or not Section 24 of the Corporation is applicable in
the present case NO
Held: 1. In the instant cases, important provisions of the
Agreement as well as the testimonial evidence presented by
the Lagdameo and Young Group shows that the parties agreed
to establish a joint venture and not a corporation. The history of
the organization of Saniwares and the unusual arrangements
which govern its policy making body are all consistent with a
joint venture and not with an ordinary corporation.
According to the unrebutted testimony of Mr. Baldwin
Young, he negotiated the Agreement with ASI in behalf of the
Philippine nationals. He testified that ASI agreed to accept the
role of minority vis-a-vis the Philippine National group of
investors, on the condition that the Agreement should contain
provisions to protect ASI as the minority.
An examination of the Agreement shows that certain
provisions were included to protect the interests of ASI as the
minority.Moreover, ASI in its communications referred to the
enterprise as joint venture. Baldwin Young also testified that
Section 16(c) of the Agreement that "Nothing herein contained
shall be construed to constitute any of the parties hereto
partners or joint venturers in respect of any transaction
hereunder" was merely to obviate the possibility of the
enterprise being treated as partnership for tax purposes and
liabilities to third parties.
2. The clearly established minority position of ASI and the
contractual allocation of board seats Cannot be disregarded.
On the other hand, the rights of the stockholders to cumulative
voting should also be protected.
Court of Appeals correctly stated that:
In our decision sought to be reconsidered, we opted to
uphold the second over the first. Upon further reflection, we
feel that the proper and just solution to give due consideration
to both factors suggests itself quite clearly. This Court should
recognize and uphold the division of the stockholders into two
groups, and at the same time uphold the right of the
stockholders within each group to cumulative voting in the
process of determining who the group's nominees would be. In
practical terms, as suggested by appellant Luciano E. Salazar
himself, this means that if the Filipino stockholders cannot
agree who their six nominees will be, a vote would have to be
taken among the Filipino stockholders only. During this voting,
each Filipino stockholder can cumulate his votes. ASI,
however, should not be allowed to interfere in the voting within
the Filipino group. Otherwise, ASI would be able to designate
more than the three directors it is allowed to designate under
the Agreement, and may even be able to get a majority of the
board seats, a result which is clearly contrary to the contractual
intent of the parties.
The legal concept of ajoint venture is of common law
origin. Under Philippine law, a joint venture is a form of
partnership and should thus be governed by the law of
partnerships. The Supreme Court has however recognized a
4
distinction between these two business forms, and has held
that although a corporation cannot enter into a partnership
contract, it may however engage in a joint venture with others.
Moreover, the usual rules as regards the construction and
operations of contracts generally apply to a contract of joint
venture. Bearing these principles in mind, the correct view
would be that the resolution of the question of whether or not
the ASI Group may vote their additional equity lies in the
agreement of the parties.
Necessarily, the appellate court was correct in upholding
the agreement of the parties as regards the allocation of
director seats under Section 5 (a) of the "Agreement," and the
right of each group of stockholders to cumulative voting in the
process of determining who the group's nominees would be
under Section 3 (a) (1) of the "Agreement." As pointed out by
SEC, Section 5 (a) of the Agreement relates to the manner of
nominating the members of the board of directors while
Section 3 (a) (1) relates to the manner of voting for these
nominees.
WHEREFORE, the petitions in G.R. Nos. 75975-76 and
G.R. No. 75875 are DISMISSED and the petition in G.R. No.
75951 is partly GRANTED. The amended decision of the
Court of Appeals is MODIFIED in that Messrs. Wolfgang
Aurbach John Griffin, David WhittinghamEmesto V. Lagdameo,
Baldwin Young, Raul A. Boncan, Ernesto R. Lagdameo, Jr.,
Enrique Lagdameo, and George F. Lee are declared as the
duly elected directors of Saniwares at the March 8,1983 annual
stockholders' meeting. In all other respects, the questioned
decision is AFFIRMED. Costs against the petitioners in G.R.
Nos. 75975-76 and G.R. No. 75875. SO ORDERED.
Pioneer Insurance & Surety Corporation v Court of
Appeals (1989)
DOCTRINE OF THE CASE: Where certain persons associated
themselves as a corporation and no stock was ever issued in
the corporation, it was treated as a trustee for the associates in
an action between them for an accounting, and its capital stock
was treated as partnership assets, sold, and the proceeds
distributed among them in proportion to the value of the
property contributed by each. However, such a relation does
not necessarily exist, for ordinarily persons cannot be made to
assume the relation of partners, as between themselves, when
their purpose is that no partnership shall exist, and it should be
implied only when necessary to do justice between the parties.
Facts: Jacob Lim was engaged in the airline business as
owner-operator if Southern Air Lines (SAL). On May 17, 1965,
Japan Domestic Airlines (JDA) and Lim entered into and
executed a sales contract for the sale and purchase of two (2)
aircrafts and one (1) set of necessary spare parts for the total
agreed price of US109,000. On May 22, 1965, Pioneer
Insurance and Surety Corporation (Pioneer) as surety
executed and issued its Surety Bond in favor of JDA in behalf
of its principal, Lim. However, it appears that Border Machinery
and Heavy Equipment Company, Inc. (Bormaheco), Francisco
and Modesto Cervantes (Cervanteses) and
ConstancioMaglana (respondents in both petitions) contributed
some funds used in the purchase of the above aircrafts and
spare parts. The funds were supposed to be their contributions
to a new corporation proposed by Lim to expand his airline
business.On June 10, 1965, Lim doing business under the
name and style of SAL executed in favor of Pioneer as deed of
chattel mortgage as security for the latter's suretyship in favor
of the former. Lim defaulted on his subsequent installment
payments prompting JDA to request payments from the surety.
Pioneer paid a total sum of P298,626.12.
On July 19, 1966, Pioneer filed an action for judicial
foreclosure with an application for a writ of preliminary
attachment against Lim and respondents, the Cervanteses,
Bormaheco and Maglana.
In their Answers, Maglana, Bormaheco and the
Cervanteses filed cross-claims against Lim alleging that they
were not privies to the contracts signed by Lim and, by way of
counterclaim, sought for damages for being exposed to
litigation and for recovery of the sums of money they advanced
to Lim for the purchase of the aircrafts in question. Petitioners
contend that as a result of the failure of respondents
Bormaheco, Spouses Cervantes, ConstancioMaglana and
petitioner Lim to incorporate, a de facto partnership among
them was created, and that as a consequence of such
relationship all must share in the losses and/or gains of the
venture in proportion to their contribution.
After trial on the merits, a decision was rendered holding Lim
liable to pay Pioneer but dismissed Pioneer's complaint against
all other defendants. However, the appellate court modified the
trial court's decision in that the plaintiffs complaint against all
the defendants was dismissed.
Issue: 1. Whether or not Pioneer can still recover the amount
paid to JDA from Lim NO
2. Whether or not the defendants Maglana, Bormaheco and
the Cervanteses can recover from Lim YES
Held: 1. From the findings of the trial court, Pioneer
reinsured its risk of liability under the surety bond it had
executed in favor of JDA. In other words, Pioneer collected the
proceeds of such reinsurance in the sum of P295,000 and paid
its alleged liability to JDA using the said amount. The payment
to the petitioner made by the reinsurers was not disputed in the
appellate court. The total amount paid by Pioneer to JDA is
P299,666.29. Since Pioneer has collected P295,000.00 from
the reinsurers, the uninsured portion of what it paid to JDA is
the difference between the two amounts, or P3,666.28. This is
the amount for which Pioneer may sue defendants, assuming
that the indemnity agreement is still valid and effective. But
since the amount realized from the sale of the mortgaged
chattels are P35,000.00 for one of the airplanes and P2,050.00
for a spare engine, or a total of P37,050.00, Pioneer is still
overpaid by P33,383.72. Therefore, Pioneer has no more claim
against defendants.
Independently of the preceding proposition Pioneer's
election of the remedy of foreclosure precludes any further
action to recover any unpaid balance of the price.
SAL or Lim, having failed to pay the second to the eight
and last installments to JDA and Pioneer as surety having
made of the payments to JDA, the alternative remedies open
to Pioneer were as provided in Article 1484 of the New Civil
Code, known as the Recto Law.
Pioneer exercised the remedy of foreclosure of the
chattel mortgage both by extrajudicial foreclosure and the
instant suit. Such being the case, as provided by the
aforementioned provisions, Pioneer shall have no further
action against the purchaser to recover any unpaid balance
and any agreement to the contrary is void.
2. Petitioners contention that that as a result of the failure
of respondents and petitioner Lim to incorporate, a de facto
partnership among them was created, and that as a
consequence of such relationship all must share in the losses
and/or gains of the venture in proportion to their contribution,
has no merit.
Where certain persons associated themselves as a
corporation but no stock was ever issued in the corporation, it
was treated as a trustee for the associates in an action
between them for an accounting, and its capital stock was
treated as partnership assets, sold, and the proceeds
distributed among them in proportion to the value of the
property contributed by each. However, such a relation does
not necessarily exist, for ordinarily persons cannot be made to
assume the relation of partners, as between themselves, when
their purpose is that no partnership shall exist and it should be
implied only when necessary to do justice between the parties;
thus, one who takes no part except to subscribe for stock in a
proposed corporation which is never legally formed does not
become a partner with other subscribers who engage in
business under the name of the pretended corporation, so as
to be liable as such in an action for settlement of the alleged
partnership and contribution. A partnership relation between
certain stockholders and other stockholders, who were also
directors, will not be implied in the absence of an agreement,
so as to make the former liable to contribute for payment of
debts illegally contracted by the latter
It is therefore clear that the petitioner never had the
intention to form a corporation with the respondents despite his
representations to them. This gives credence to the cross-
claims of the respondents to the effect that they were induced
and lured by the petitioner to make contributions to a proposed
corporation which was never formed because the petitioner
reneged on their agreement.
Applying therefore the principles of law earlier cited to the
facts of the case, necessarily, no de facto partnership was
created among the parties which would entitle the petitioner to
a reimbursement of the supposed losses of the proposed
corporation. The record shows that the petitioner was acting on
his own and not in behalf of his other would-be incorporators in
transacting the sale of the airplanes and spare parts.
WHEREFORE, the instant petitions are DISMISSED. The
questioned decision of the Court of Appeals is AFFIRMED. SO
ORDERED.