You are on page 1of 10

WEEK 1

Fernando vs Spouses Reyes

FACTS:
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 partnersh ip shall provide loans to the employees of
Gragera’s 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, Za bat 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 Gragera’s 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, i nsofar 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 incu rred by the
money-lending enterprise of the parties must first be deducted from the “total income” in order to arrive at the “net p rofit” 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”.

xxx

Facts:
This is a petition for review on certiorari assailing CA decision which affirmed the RTC decision . Santos and Nieves Reyes verbally agreed that Santos would act as financier
while Nieves and Meliton Zabat would act as solicitors for membership and collectors of loan payment. 70% of the profits woul d go to Santos while Nieves and Zabat would
get 15% each.
It was a lending venture business.

Nieves introduced Gragera of Monte Maria Corp, who obtained short term loans for the partnership in consideration of commissi ons. In 1986, Nieves and Zabat executed an
agreement which formalized their earlier verbal agreement. But, Santis and Nieves later discovered that Zabat engaged in the same lending business. Hence, Zabat was
expelled from the partnership. On June 1987, Santos filed a complaint for recovery of sum of money and damages against the re spondents, alleging them as employees who
misappropriated the funds. Respondents assert they were partners and not mere employees. Santos claimed that after discovery of Zabat's activities, he ceased infusing
funds thereby extinguishing the partnership.

Issue:
Whether or not the parties' relationship was one of partnership or of employer -employee

Held:
Yes they were partners. By the contract of partnership, 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. The "Articles of Agreement" stipulated that the signatories shall share the profit s of the business in a 70-15-15 manner, with
petitioner getting the lion's share. This stipulation clearly proved the establis hment of a partnership.

Indeed, the partnership was established to engage in a money-lending business, despite the fact that it was formalized only after the Memorandum of Agreement had been
signed by petitioner and Gragera.

xxx

Facts:
In June 1986, Fernando Santos, Nieves Reyes and Melton Zabat orally agreed to form a partnership – a lending business. Santos contributed 70% (as financier) while Reyes
and Zabat shared 30% (as industrial partners). Later, Reyes introduced Cesar Gragera whom they would pr ovide loans to Gragera’s corporation particularly its employees. In
return Gragera shall have a commission based on the loan payments. The partners decided on August 1986 to have a written agre ement but they found out that Zabat
engaged in a competitor venture thus expelled him. The two had Arsenio Reyes (husband of Nieves) replaced Zabat.
However, Santos accused the Spouses of not remitting the loans payments. He argued that the couple were only his employees an d there was a special arrangement between
him and Gragera. The trial court and the Court of Appeals ruled against Santos.

Issue:
Whether or not there was a partnership formed between Santos and the Spouses Reyes?

Held:
YES. The original partnership with Zabat continued even after the expulsion of the latter from the partnership because there was no intent to dissolve the (partnershi p)
relationship. ”

[Respondents] were industrial partners of [petitioner]. . . . Nieves herself provided the initiative in the l ending activities with Monte Maria. In consonance with the agreement
between appellant, Nieves and Zabat (later replaced by Arsenio), [respondents] contributed industry to the common fund with t he intention of sharing in the profits of the
partnership. [Respondents] provided services without which the partnership would not have [had] the wherewithal to carry on the purpose for w hich it was organized and as
such *were+ considered industrial partners (Evangelista v. Abad Santos, 51 SCRA 416 *1973+). “

While concededly, the partnership between [petitioner,] Nieves and Zabat was technically dissolved by the expulsion of Zabat therefrom, the remaining partners simply
continued the business of the partnership without undergoing the procedure relative to dis solution. Instead, they invited Arsenio to participate as a partner in their
operations. There was therefore, no intent to dissolve the earlier partnership. The partnership between [petitioner,] Nieves and Arsenio simply took over and continued the
business of the former partnership with Zabat, one of the incidents of which was the lending operations with Monte Maria.”

xxx
FACTS:
In June 1986, Fernando Santos and Nieves Reyes were introduced to each other by Meliton Zabat regarding a lending business ve nture proposed by Nieves. They orally
instituted a partnership with them as partners and agreed that they will have a 70 -15-15 share for Fernando Santos, Nieves Reyes, and Melton Zabat respectively. They
agreed that Santos shall be financier and that Nieves and Zabat shall contribute their industry by taking charge of solicitation of members and collection of loan payments.

Later, in July 1986, Nieves introduced Cesar Gragera to Santos. Gragera was the chairman of Monte Maria Development Corporation. Gra gera sought short-term loans for
members of the corporation. It was agreed that the partnership shall provide loans to the employees of Gragera’s 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. However, Zabat was expelled from the partnership for engaging
in another lending business which competes with their business.

The two continued with the partnership and they took with them Nieves’ husband, Arsenio, who became their loan investigator. Later, Santos accu sed the spouses of not
remitting Gragera’s 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 amounting to P3M. 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, Zab at and Nieves.

The Trial court held that respondents were partners, and not merely employees of the petitioner. It ruled that Gragera was only a commission agent of petitioner, not his
partner.

The CA upheld the decision of the lower court. The CA ruled that the following circumstances indicated the existence of a par tnership among the parties (1) it was Nieves who
broached to petitioner the idea of starting a money-lending business and introduced him to Gragera (2) Arsenio received dividends or profit -shares covering the period of July
15 to August 7, 1986 (3) the partnership contract was executed after the Agreement with Gragera and petitioner and thus showed the parties’ intention to consider it as a
transaction of the partnership. In their common venture, petitioner invested capital while respondents contributed industry o r services with the intention of sharing in the
profits of the business.

The defendants were industrial partners of the petitioner. Nieves herself provided the initiative in the lending activities w ith Monte Maria. And as agreed, Nieves and Zabat
(later replaced by Arsenio) contributed industry to the common fund with the intention of sharing in the profits of the partnership. The spouses provided services without
which the partnership would not have had the ability to carry on the purpose for which it was organized and as such were cons idered industrial partners . The partnership
between Santos, Nieves and Zabat was technically dissolved by the expulsion of Zabat. The remaining partners simply continued the business of the partnership without
undergoing the procedure relative to dissolution. Instead, they invited Arsenio to participate as a partner in their operations. There was therefore, no intent to dissolve the
earlier partnership. The partnership between Santos, Nieves and Arsenio simply took over and continued the business of the fo rmer partnership with Zabat, one of the
incidents of which was the lending operations with Monte Maria.

Moreover, Gragera and Santos were not partners. The money-lending activities undertaken with Monte Maria were done in pursuit of the business for which the partnership
between Santos, Nieves and Zabat (later Arsenio) was organized. Gragera who represented Monte Maria was merely paid commissions in exch ange for the collection of loans.
The commissions were fixed on gross returns, regardless of the expenses incurred in the operation of the business. The sharing of gross returns does not in itself establish a
partnership.

ISSUE/S:
Whether or not the Santos and Spouses Reyes are partners

HELD:
Yes, the court upheld the decisions of the Trial Court and CA that there was a partnership created between Santos and Spouses Reyes. By the contract of partnership, two or
more persons bind themselves to contribute money, property or industry to a common fund, with the intention of dividing the p rofits among themselves. The "Articles of
Agreement" stipulated that the signatories shall share the profits of the business in a 70 -15-15 manner, with petitioner getting the biggest share. This stipulation clearly
proved the establishment of a partnership.

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 com mission 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 part nership.
Heirs of Tan Eng Kee vs CA

FACTS:
Benguet Lumber has been around even before World War II but during the war, its stocks were confiscated by the Japanese. After the war, the brothers Tan Eng Lay and Tan
Eng Kee pooled their resources in order to revive the business. In 1981, Tan Eng Lay caused the conversion of Benguet Lumber into a corporation called Benguet Lumber and
Hardware Company, with him and his family as the incorporators. In 1983, Tan Eng Kee died. Thereafter, the heirs of Tan Eng Kee demanded for an a ccounting and the
liquidation of the partnership.

Tan Eng Lay denied that there was a partnership between him and his brother. He said that Tan Eng Kee was merely an employee of Benguet Lumber. He showed evidence
consisting of Tan Eng Kee’s payroll; his SSS as an employee and Benguet Lumber being the employee. As a result of the presentation of said evidence, the heirs of Tan Eng Kee
filed a criminal case against Tan Eng Lay for allegedly fabricating those evidence. Said criminal case was however dismissed for lack of evidence.

ISSUE:
Whether or not Tan Eng Kee is a partner.

HELD:
No. There was no certificate of partnership between the brothers. The heirs were not able to show what was the agreement between the brothers as to the sharing of profits.
All they presented were circumstantial evidence which in no way proved partnership.

It is obvious that there was no partnership whatsoever. Except for a firm name, there was no firm account, no firm letterheads submitted as evidence, no certificate of
partnership, no agreement as to profits and losses, and no time fixed for the duration of the partnership. There was even no attempt to submit an accounting corresponding
to the period after the war until Kee’s death in 1984. It had no business book, no written account nor any memorandum for th at matter and no license mentioning the
existence of a partnership.

In fact, Tan Eng Lay was able to show evidence that Benguet Lumber is a sole proprietorship. He registered the same as such in 1954; that Kee was just an employee based on
the latter’s payroll and SSS coverage, and other records indicating Tan Eng Lay as the proprietor.

Also, the business definitely amounted to more P3,000.00 hence if there was a partnership, it should have been made in a public instrum ent.

But the business was started after the war (1945) prior to the publication of the New Civil Code in 1950?

Even so, nothing prevented the parties from complying with this requirement.

Also, the Supreme Court emphasized that for 40 years, Tan Eng Kee never asked for an accounting. The essence of a partnership is that the partners share in the profits and
losses. Each has the right to demand an accounting as long as the partnership exists. Even if it can be speculated that a scenario wherein “if excell ent relations exist among
the partners at the start of the business and all the partners are more interested in seeing the firm grow rather than get immediate returns, a deferment of sharing in the
profits is perfectly plausible.” But in the situation in the case at bar, the deferment, if any, had gone on too long to be p lausible. A person is presumed to take ordinary care of
his concerns. A demand for periodic accounting is evidence of a partnership which Kee never did.

The Supreme Court also noted:

In determining whether a partnership exists, these rules shall apply:

(1) Except as provided by Article 1825, persons who are not partners as to each other are not partners as to third persons;

(2) Co-ownership or co-possession does not of itself establish a partnership, whether such co-owners or co-possessors do or do not share any profits made by the
use of the property;

(3) The sharing of gross returns does not of itself establish a partnership, whether or not the persons sharing them have a joint or common right or interest in any
property which the returns are derived;

(4) The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but no such inference shall be drawn if
such profits were received in payment:

(a) As a debt by installment or otherwise;

(b) As wages of an employee or rent to a landlord;

(c) As an annuity to a widow or representative of a deceased partner;

(d) As interest on a loan, though the amount of payment vary with the profits of the business;

(e) As the consideration for the sale of a goodwill of a business or other property by installments or otherwise.

xxx

FACTS:
After the second World War, Tan EngKee and Tan Eng Lay, pooling their resources and industry together, entered into a partner ship engaged in the business of selling lumber
and hardware and construction supplies. They named their enterprise "Benguet Lumber" which they jointly managed until Tan Eng Kee's death. Petitioners herein averred
that the business prospered due to the hard work and thrift of the alleged partners. However, they claimed that in 1981, Tan Eng Lay and his children caused the conversion
of the partnership "Benguet Lumber" into a corporation called "Benguet Lumber Company." The incorporation was purportedly a r use to deprive Tan Eng Kee and his heirs of
their rightful participation in the profits of the business. Petitioners prayed for accounting of the partnership assets, and the dissolution, winding up and liquidation thereof,
and the equal division of the net assets of Benguet Lumber. The RTC ruled in favor of petitioners, declaring that Benguet Lum ber is a joint venture which is akin to a particular
partnership. The Court of Appeals rendered the assailed decision reversing the judgment of the trial court.
ISSUE:
Whether the deceased Tan Eng Kee and Tan Eng Lay are joint adventurers and/or partners in a busine ss venture and/or particular partnership called Benguet Lumber and as
such should share in the profits and/or losses of the business venture or particular partnership

RULING:
There was no partnership whatsoever. Except for a firm name, there was no firm account, no firm letterheads submitted as evidence, no certificate of partnership, no
agreement as to profits and losses, and no time fixed for the duration of the partnership. There was even no attempt to submi t an accounting corresponding to the period
after the war until Kee's death in 1984. It had no business book, no written account nor any memorandum for that matter and no license mentioning the existence of a
partnership. Also, the trial court determined that Tan Eng Kee and Tan Eng Lay had entered into a joint venture, which it said is akin to a particular partnership. A particular
partnership is distinguished from a joint adventure, to wit:(a) A joint adventure (an American concept similar to our joint a ccounts) is a sort of informal partnership, with no
firm name and no legal personality. In a joint account, the participating merchants can transact business under their own nam e, and can be individually liable therefor. (b)
Usually, but not necessarily a joint adventure is limited to a SINGLE TRANSACTION, although the business of pursuing to a successful termination may continue for a number
of years; a partnership generally relates to a continuing business of various transactions of a certain kind. A joint venture "presupposes generally a parity of standing between
the joint co-ventures or partners, in which each party has an equal proprietary interest in the capital or property contributed, and where each party exercises equal rights in
the conduct of the business. The evidence presented by petitione rs falls short of the quantum of proof required to establish a partnership. In the absence of evidence, we
cannot accept as an established fact that Tan Eng Kee allegedly contributed his resources to a common fund for the purpose of establishing a partnership. Besides, it is indeed
odd, if not unnatural, that despite the forty years the partnership was allegedly in existence, Tan Eng Kee never asked for an accounting. The essence of a partnership is that
the partners share in the profits and losses .Each has the right to demand an accounting as long as the partnership exists. A demand for periodic accounting is evidence of a
partnership. During his lifetime, Tan Eng Kee appeared never to have made any such demand for accounting from his brother, Tang Eng Lay. We conclude that Tan Eng Kee
was only an employee, not a partner since they did not present and offer evidence that would show that Tan Eng Kee received amounts of money allegedly representing his
share in the profits of the enterprise. There being no pa rtnership, it follows that there is no dissolution, winding up or liquidation to speak of.

xxx

Doctrine:
Where circumstances taken singly may be inadequate to prove the intent to form a partnership, nevertheless, the collective effect of these circumstances may be such as to
support a finding of existence of the parties’ intent.

The Doctrine is the essence of 1825.

Facts:
After Tan Eng Kee’s Death, his common-law wife Matilde Abuho and their children filed an action against his brother, Tan Eng Lay for accounting, liquidation and wi nding up
of the alleged partnership Tan Eng Kee had with Tan Eng Lay.

The heirs claim that the two brothers were partners in Benguet Lumber Co. and had been partners since the company was operati ng after the end of World War 2. Tan Eng
Lay, the president of the company claims that Tan Eng Kee was only an employee and presented documents showing that Tan Eng Kee was receiving salary from the company
payroll.

The RTC ruled in favor of the Heirs of Tan Eng Kee.

The CA reversed the RTC and found that no such partnership existed between the brothers.

Issue:
Whether the two brothers were partners in Benguet Lumber Co.

Held:
NO. They were never partners.

Ratio:
Tan Eng Kee, in his lifetime never executed any acts which would indicate that he was a partner.
1. He never demanded for periodic accountings of the common fund , which would be expected of a real partner;
2. He never received any shares in the profits of Benguet Lumber, he only received salary as evidenced by the payroll documents presented by Tan Eng Lay;
3. The Heirs were unable to prove that the brothers intended to divide the profits of the business between themselves.

Even if Tan Eng Kee was granted certain privileges not given to regular employees, (such as being allowed to live with his fa mily on the grounds of the Lumber Compound, and
having supervisory powers over the regular employees) the Court found that these privileges were a result of being related to the owner of the c ompany and not because he
was a partner.

 Tan Eng Kee never represented himself as a partner to any third person his actions, when he was alive, taken together with ho w his brother treated him, strongly
indicate that he was NOT a partner.

 Article 1825 is meant to protect third persons who were misled by a person acting as a partner even if he really isn’t. Since Tan Eng Kee never represented himself
as a partner, and there is no evidence or documentation of him being a partner, then he is not a partner.

Negado vs Makabenta (FULL)

On September 30, 1950, Filomeno R. Negado filed a complaint in the Justice of the Peace Court of Carigara, Leyte, against Gon zalo Makabenta for the recovery of a sum of
money. Within the prescribed period, the defendant Gonzalo Makabenta filed his answer with counterclaim. After issues had bee n joined, the case was set for trial on
September 18, 1951. At the trial, defendant failed to appear; plaintiff moved that the former be declared in default, and accordingly, the Justice of the Peace Court declared
him in default and ordered the plaintiff to present his evidence. Judgment was rendered for the plaintiff on November 24, 195 1, copy of which defendant Makabenta
received on December 8, 1951, and it was only then that he learned for the first time that he was declared in default and tha t judgment by default had been taken against
him. Whereupon, defendant Gonzalo Makabenta appealed to the Court of First Instance of Leyte (Civil Case No. 1453), where both parties filed their respective pleadings.
When the case was ready for trial, the plaintiff appellee Filomeno R. Negado filed on July 20, 1952 a motion for the dismissal of the appeal on the ground that the appellant
had been declared in default in the Justice of the Peace Court and had, therefore, no standing in court. The Court of First I nstance considered the motion well-taken and
dismissed the appeal, holding that Makabenta had no right to appeal unless the order declaring him in default is first set aside. A motion for the reconsideration of the order
of dismissal was denied, and defendant-appellant Gonzalo Makabenta came to this court with a petition for certiorari , asking that after due hearing, the order of the
respondent Judge dismissing his appeal be annulled, and the case set for trial on the merits.

The petition must be granted. The order of default taken against the petitioner Gonzalo Makabenta in the Justice of the Peace Court of Carigara, Leyte is clearly illegal and
without effect; for although petitioner failed to appear during the trial of the case therein, he filed his answer to the com plaint, and as we have consistently held, the sole
ground for default in the inferior courts is failure to appeal (Veluz vs. Justice of the Peace of Sariaya, 42 Phil., 557; Quizan vs. Arellano, 90 Phil., 644, Car ballo vs. Hon.
Demetrio B. Encarnacion, et al., 92 Phil., 974). By filing his answer in the Justice of the Peace Court, petitioner put in his appearance and submitted to its jurisdiction; hence,
he was not, and should not have been declared, in default. While it was discretionary for the court to proceed with the trial of the case in the absence of petitioner or his
counsel, and render judgment on the basis of the evidence presented by the plaintiff, such judgment was not by default, and petitioner could, u nder the law, appeal, as he in
fact did appeal, to the Court of First Instance (Carballo vs. Hon. Demetrio B. Encarnacion, supra). Consequently, in dismissing petitioner's appeal on the ground that he had no
standing in court unless the order of default is first set aside, the respondent Court committed a grave abuse of discretion amounting to lack of jurisdiction.

This petition for certiorari to annul the order of dismissal of the appeal is in the nature of a petition for mandamus to order the Court of Fi rst Instance to proceed with the
hearing of the case, and it is not barred by the fact that the order complained of was appealable (Quizan vs. Arellano, Supra).

Wherefore, the petition for certiorari is granted, the order of the court a quo dismissing petitioner's appeal is annulled, a nd the respondent judge is hereby directed to
reinstate said appeal and proceed with the trial of the case on the merits. Costs to be taxed against the respondent Filomeno R. Negado.

xxx

(DIGEST)

Facts:
Plaintiffs filed a suit against the defendant for the recovery of possession and management of Liberty Theater located in Ley te and for an accounting of all money and
property pertaining thereto. The plaintiffs allege that the theater is owned and operated by a partnership known as Hemarogui Company composed of the plaintiffs and
defendant. Conversely, the defendant alleges that he is the sole and exclusive owner of the theater while the plaintiffs are merely creditor. The trial court held that no
partnership exists and the oral and material evidence (books, accounts, and papers) presented by the plaintiffs are incompetent to establish existence of the partnership.

Issue:
Whether or not a partnership exists among Negado, Rocha, Guirindola and Makabenta

Decision:
There exists a partnership. In determining whether or not a particular transaction constitutes partnership, the intention as disclosed by the entire transaction, and as
gathered from the facts and from the language employed by the parties as well as their conduct. A partnership may be created without any definite intention to create it, the
intention of the parties being inferred from their conduct and dealings with each other. For the purpose of showing the existence of a partnership, books, papers, accounts
and similar writings are admissible as evidence provided that the party against whom they are offered is shown to have authorized or ratified them .

Yulo vs Yang Chiaco Seng

FACTS:
Yang Chiao Seng proposed to form a partnership with Rosario Yulo to run and operate a theatre on the premises occupied by Cin e Oro, Plaza Sta. Cruz, Manila, the principal
conditions of the offer being (1) Yang guarantees Yulo a monthly participation of P3,000 (2) partnership shall be for a period of 2 years and 6 months with the condition that if
the land is expropriated, rendered impracticable for business, owner constructs a permanent building, then Yulo’s right to lease and partnership even if period agreed upon
has not yet expired; (3) Yulo is authorized to personally conduct business in the lobby of the building; and (4) after Dec 31 , 1947, all improvements placed by partnership shall
belong to Yulo but if partnership is terminated before lapse of 1 and ½ years, Yang shall have right to remove improvements. Parties established, “Yang and Co. Ltd.”, to exi st
from July 1, 1945 – Dec 31, 1947.In June 1946, they executed a supplementary agreement extending the partnership for 3 years beginning Jan 1, 1948 to Dec 31, 1950. The
land on which the theater was constructed was leased by Yulo from owners, Emilia Carrion and Maria Carrion Santa Marina for a n indefinite period but that after 1 year, such
lease may be cancelled by either party upon 90-day notice. In Apr 1949, the owners notified Yulo of their desire to cancel the lease contract come July. Yulo and husband
brought a civil action to declare the lease for a n indefinite period. Owners brought their own civil action for ejectment upon Yulo and Yang.

CFI:
Two cases were heard jointly; Complaint of Yulo and Yang dismissed declaring contract of lease terminated.

CA:
Affirmed the judgment. In 1950, Yulo demanded from Yang her share in the profits of the business. Yang answered saying he had to suspend payment because of pending
ejectment suit. Yulo filed present action in 1954, alleging the existence of a partnership between them and that Yang has ref used to pay her shares.

Defendant’s Position:
The real agreement between plaintiff and defendant was one of lease and not of partnership; that the partnership was adopted as a subterfuge to get around the prohibition
contained in the contract of lease between the owners and the plaintiff against the sublease of the property.

Trial Court:
Dismissal. It is not true that a partnership was created between them because defendant has not actually contributed the sum mentioned in the Articles of Partnership or any
other amount. The agreement is a lease because plaintiff didn’t share either in the profits or in the losses of the business as required by Art 1769 (CC) and because p laintiff
was granted a “guaranteed participation” in the profits belies the supposed existence of a partnership.

Issue:
Was the agreement a contract a lease or a partnership?

Ruling:
Dismissal. The agreement was a sublease not a partnership. The following are the requisites of partnership: (1) two or more persons who bind themselves to contribute
money, property or industry to a common fund; (2) the intention on the part of the partners to divide the profits among themselves (Article 1761, CC) Plaintiff did not furnish
the supposed P20,000 capital nor did she furnish any help or intervention in the management of the theatre. Neith er has she demanded from defendant any accounting of
the expenses and earnings of the business. She was absolutely silent with respect to any of the acts that a partner should ha ve done; all she did was to receive her share of
P3,000 a month which cannot be interpreted in any manner than a payment for the use of premises which she had leased from the owners.

WEEK 2 (NO CASES)

WEEK 3

Ortega vs CA

FACTS:
The law firm of R,L,S and C was duly registered in the Mercantile Registry and reconstituted with the SEC. There were several amendments to its art icles of partnership.
Respondent-Appellees senior and junior partners associated themselves together. Ortega informed them through a letter that he is retiring from the firm of Bito, Misa and
Lozada regarding the liquidation of his participation in it. He later on filed with the SICD a petition for dissolution and l iquidation of partnership.

Hearing Officer:
Said withdrawal of O did not dissolve the law partnership and both parties to the case are enjoined to abide by the provisions of the Agreement re: the liquidation of the
shares of any retiring or withdrawing partner.

SEC:
Reversed the decision ruling that the withdrawal had in fact dissolved the partnership of BML as a partnership at will, the law firm can be dissolved by any partner at anytime
by his withdrawal regardless of good faith or bad faith. Remanded the case to the HO to determine rights and obligations of p arties.

CA:
Affirmed in toto the SEC decision and that there is no need for the appointment of a receiver as no sufficient proof had been shown to indicate that the partnership assets
were in any such danger of being lost, removed or materially impaired.

ISSUES:
1. Whether it was a partnership at will; whether M’s withdrawal dissolved the partnership;
2. Whether such withdrawal was made in bad faith.

SC:
It was a partnership at will as it had not fixed a specified period for its undertaking.
It may be dissolved at will by any of the partners but if it was done in bad faith, such partner shall be liable for damages. Upon dissolution, the partnership continues and its
legal personality is retained until the complete winding up of its business culminating in its termin ation. The liquidation of assets is governed by the CC but an agreement
between parties is binding upon them.

It was not done out of bad faith as it was spurred by an interpersonal conflict among the partners.

xxx

FACTS:
On December 19, 1980, respondent Misa associated himself together, as senior partner with petitioners Ortega, del Castillo, J r., and Bacorro, as junior partners. On Feb. 17,
1988, respondent Misa wrote a letter stating that he is withdrawing and retiring from the firm and asking for a meeting with the petitioners to discuss the mechanics of the
liquidation. On June 30, 1988, petitioner filed a petition to the Commision's Securities Investigation and Clearing Departmen t for the formal dissolution and liquida tion of the
partnership. On March 31, 1989, the hearing officer rendered a decision ruling that the withdrawal of the petitioner has not dissolved the partnership. On appeal, the SEC en
banc reversed the decision and was affirmed by the Court of Appeals. H ence, this petition.

ISSUE:
Whether or not the Court of Appeals has erred in holding that the partnership is a partnership at will and whether or not the Court of Appeals has erred in holding that the
withdrawal of private respondent dissolved the partnership regardless of his good or bad faith

HELD:
No. The SC upheld the ruling of the CA regarding the nature of the partnership. The SC further stated that a partnership that does not fix its term is a partnership at will. The
birth and life of a partnership at will is predicated on the mutual desire and consent of the partners. The right to choose with whom a person wishes to a ssociate himself is
the very foundation and essence of that partnership. Its continued existence is, in turn, dependent on the cons tancy of that mutual resolve, along with each partner's
capability to give it, and the absence of a cause for dissolution provided by the law itself. Verily, any one of the partners may, at his sole pleasure, dictate a dissolution of the
partnership at will. He must, however, act in good faith, not that the attendance of bad faith can prevent the dissolution of the partnership b ut that it can result in a liability
for damages.

xxx

Facts:
 Ortega, then a senior partner in the law firm Bito, Misa, and Lozada withdrew in said firm.
 He filed with SEC a petition for dissolution and liquidation of partnership.
 SEC en banc ruled that withdrawal of Misa from the firm had dissolved the partnership. Reason: since it is partnership at will, the law firm could be dissolved by
any partner at anytime, such as by withdrawal therefrom, regardless of good faith or bad faith, since no partner can be force d to continue in the partnership
against his will.

Issue:
1. WON the partnership of Bito, Misa & Lozada (now Bito, Lozada, Ortega & Castillo) is a partnership at will;
2. WON the withdrawal of Misa dissolved the partnership regardless of his good or bad fai th;
Held:
1. Yes. The partnership agreement of the firm provides that ”*t+he partnership shall continue so long as mutually satisfactor y and upon the death or legal incapacity of one of
the partners, shall be continued by the surviving partners.”
2. Yes. Any one of the partners may, at his sole pleasure, dictate a dissolution of the partnership at will (e.g. by way of withdrawal of a partner). He must, however, act in good
faith, not that the attendance of bad faith can prevent the dissolution of the partn ership but that it can result in a liability for damages

Tacao vs CA

FACTS:
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 Belo’s assurances.

The venture succeeded under Anay’s marketing prowess.

But then the relationship between Anay and Tocao soured. One day, Tocao advised one of the branch managers that Anay was no l onger 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 company’s 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 p artnership, the doctrine of delectus personae
allows the partners to have the power, although not necessarily the right to dissolve the partnership.

Tocao’s 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.

xxx

FACTS:
Private respondent Nenita A. Anay met petitioner William T. Belo, then the vice-president for operations of Ultra Clean Water Purifier, through her former employer in
Bangkok. Belo introduced Anay to petitioner Marjorie Tocao, who conveyed her desire to enter into a joint venture with her for the importation and local distribution of
kitchen cookwares

Under the joint venture, Belo acted as capitalist, Tocao as president and general manager, and Anay as head of the marketing department and later, vice-president for sales

The parties agreed that Belo's name should not appear in any documents relating to their transactions with West Bend Company. Anay having secu red the distributorship of
cookware products from the West Bend Company and organized the administrative staff and the sales force, the cookware business took off successfully. They operated
under the name of Geminesse Enterprise, a sole proprietorship registered in Marjorie Tocao's name.

The parties agreed further that Anay would be entitled to:

(1) ten percent (10%) of the annua l net profits of the business;
(2) overriding commission of six percent (6%) of the overall weekly production;
(3) thirty percent (30%) of the sales she would make; and
(4) two percent (2%) for her demonstration services. The agreement was not reduced t o writing on the strength of Belo's assurances that he was sincere, dependable and
honest when it came to financial commitments.

On October 9, 1987, Anay learned that Marjorie Tocao had signed a letter addressed to the Cubao sales office to the effect th at she was no longer the vice-president of
Geminesse Enterprise.

Anay attempted to contact Belo. She wrote him twice to demand her overriding commission for the period of January 8, 1988 to February 5, 1988 and the audit of the
company to determine her share in the net profits.
Anay still received her five percent (5%) overriding commission up to December 1987. The following year, 1988, she did not re ceive the same commission although the
company netted a gross sales of P 13,300,360.00.

On April 5, 1988, Nenita A. Anay filed Civil Case No. 88-509, a complaint for sum of money with damages against Marjorie D. Tocao and William Belo before the Regional Trial
Court of Makati, Branch 140

The trial court held that there was indeed an "oral partnership agreement between the plaintiff and the defendants. The Court of Appeals affirmed the lower court’s decision.

ISSUE:
Whether the parties formed a partnership

HELD:
Yes, the parties involved in this case formed a partnership

The Supreme Court held that to be considered a juridical personality, a partnership must fulfill these requisites:

(1) two or more persons bind themselves to contribute money, property or industry to a common fund; and

(2) intention on the part of the partners to divide the profits among themselves. It may be constituted in any form; a public instrument is necessary only where immovable
property or real rights are contributed thereto.

This implies that since a contract of partnership is consensual, an oral contract of partnership is as good as a written one.

In the case at hand, Belo acted as capitalist while Tocao as president and general manager, and Anay as head of the marketing department and later, vice-president for sales.
Furthermore, Anay was entitled to a percentage of the net profits of the business.

Therefore, the parties formed a partnership.

xxx

Facts:
Nenita Anay, a former marketing adviser of Technolux Bangkok, accepted an offer from William Belo and Marjorie Tocao, to beco me an industrial partner to a business
venture/partnership. Geminese Enterprises, a sole-proprietorship registered in Tocao’s name, would be a distributorship of cookware, and would benefit from Anay’s
expertise and knowledge and her connection with a kitchenware manufacturer in the US. The partnership also agreed to use her name in securing distributorship of cookware
from such manufacturer. Anay eventually became Vice-President for sales. She organized administrative staff and sales force. Tocao was the president and general manager
of Geminise while Belo was the capitalist partner. Anay accepted the invitation of their manufacturer to attend a distributor/dealer meeting in Wisconsin. Upon her return,
Anay learned that Tocao had written a letter to the Cubao sales office to the effect that she was no longer the vice-president of Geminese, and was now barred from holding
office and conducting demonstrations in the offices. Anay, failing to get a response from Belo, demanded for the commission due her and an audit of the company, to
determine her share in the net profits.

Issue:
Whether or not the plaintiff was an employee or partner of Marjorie Tocao and Belo

Held:
Yes, the plaintiff was an employee or partner of Tocao and Belo. To be considered a juridical personality, a partnership must fulfill these requisites: (1) two or more persons
bind themselves to contribute money, property or industry to a common fund; and (2) intention on the part of the partners to divide the profits among themselves. It may be
constituted in any form; a public instrument is necessary only where immovable property or real rights are contributed theret o. This implies that since a contract of
partnership is consensual, an oral contract of partnership is as good as a written one. Where no immovable property or real r ights are involved, what matters is that the
parties have complied with the requisites of a partnership. The fact that there appears to be no record in the Securities and Exchange Commission of a public instrument
embodying the partnership agreement pursuant to Article 1772 of the Civil Code did not cause the nullification of the partner ship.

JG Summit Holdings vs CA (November 20, 2000)

FACTS:
National Investment and Development Corporation (NIDC) and Kawasaki Heavy Industries entered into a Joint Venture Agreement i n a shipyard business named PHILSECO,
with a shareholding of 60-40 respectively. NIDC’s interest was later transferred to the National Government.

Pursuant to President Aquino’s Proclamation No.5, which established the Committee on Privatization (COP) and Asset Privatizat ion Trust (APT), and allowed for the
disposition of the government’s non-performing assets, the latter allowed Kawasaki Heavy Industries to choose a company to which it has stockholdings, to top the winning
bid of JG Summit Holdings over PHILSECO. JG Summit protested alleging that such act would effectively increase Kawasaki’s int erest in PHILSECO—a shipyard is a public
utility–and thus violative of the Constitution.

ISSUE:
Whether or not respondents’ act is valid.

HELD:
No. A shipyard such as PHILSECO being a public utility as provided by law, the following provision of the Article XII of the Cons titution applies:

“Sec. 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to
corporations or associations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens, nor shall such
franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except
under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. The State shall encoura ge
equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be
limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association shall be citizens of the Philippines.”
Notably, paragraph 1.4 of the JVA accorded the parties the right of first refusal “under the same terms.” This phrase implies that when either party exercises the right o f first
refusal under paragraph 1.4, they can only do so to the extent allowed them by paragraphs 1.2 and 1.3 of the JVA or under t he proportion of 60%-40% of the shares of stock.
Thus, should the NIDC opt to sell its shares of stock to a third party, Kawasaki could only exercise its right of first refus al to the extent that its total shares of stock would not
exceed 40% of the entire shares of stock of SNS or PHILSECO. The NIDC, on the other hand, may purchase even beyond 60% of the total shares. As a government corporation
and necessarily a 100% Filipino-owned corporation, there is nothing to prevent its purchase of stocks even beyond 60% of the capitalization as the Constitution clearly limits
only foreign capitalization.

xxx

FACTS:
The National Investment and Development Corporation (NIDC), a government corporation, entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd.
for the construction, operation and management of the Subic National Shipyard, Inc., later became the Philippine Shipyard and Engineering Corporation (PHILSECO). Under
the JVA, NIDC and Kawasaki would maintain a shareholding proportion of 60%-40% and that the parties have the right of first refusal in case of a sale.

Through a series of transfers, NIDC’s rights, title and interest in PHILSECO eventually went to the National Government. In t he interest of national economy, it was decided
that PHILSECO should be privatized by selling 87.67% of its total outstanding capital stock to private entities. After negotiations, it was agreed that Kawasaki’s right of first
refusal under the JVA be “exchanged” for the right to top by five percent the hi ghest bid for said shares. Kawasaki that Philyards Holdings, Inc. (PHI), in which it was a
stockholder, would exercise this right in its stead.

During bidding, Kawasaki/PHI Consortium is the losing bidder. Even so, because of the right to top by 5% percen t the highest bid, it was able to top JG Summit’s bid. JG
Summit protested, contending that PHILSECO, as a shipyard is a public utility and, hence, must observe the 60% -40% Filipino-foreign capitalization. By buying 87.67% of
PHILSECO’s capital stock at bidding, Kawasaki/PHI in effect now owns more than 40% of the stock.

ISSUE:
1. Whether or not PHILSECO is a public utility
2. Whether or not Kawasaki/PHI can purchase beyond 40% of PHILSECO’s stocks

HELD:
In arguing that PHILSECO, as a shipyard, was a public utility, JG Summit relied on sec. 13, CA No. 146. On the other hand, Ka wasaki/PHI argued that PD No. 666 explicitly
stated that a “shipyard” was not a “public utility.” But the SC stated that sec. 1 of PD No. 666 was expressly repealed by sec. 20, BP Blg. 391 and when BP Blg. 391 was
subsequently repealed by EO 226, the latter law did not revive sec. 1 of PD No. 666. Therefore, the law that states that a sh ipyard is a public utility still stands.

A shipyard such as PHILSECO being a public utility as provided by law is therefore required to comply with the 60%-40% capitalization under the Constitution. Likewise, the
JVA between NIDC and Kawasaki manifests an intention of the parties to abide by this constitutional mandate. Thus, under the JVA, should the NIDC opt to sell its shares of
stock to a third party, Kawasaki could only exercise its right of first refusal to the extent that its total shares of stock would not exceed 40% of the entire shares of stock. The
NIDC, on the other hand, may purchase even beyond 60% of the total shares. As a government corporation and necessarily a 100% Filipino-owned corporation, there is
nothing to prevent its purchase of stocks even beyond 60% of the capitalization as the Constitution clearly limits only foreign capitalization.

Kawasaki was bound by its contractual obligation under the JVA that limits its right of first refusal to 40% of the total cap italization of PHILSECO. Thus, Kawasaki cannot
purchase beyond 40% of the capitalization of the joint venture on account of both constitutional and contractual proscriptions.

xxx

[Separate Opinion FULL] (September 24, 2003) [Nasa Outline na Date]

Whether a shipyard is a public utility is at the heart of the present controve rsy.

Although I take a different route, I reach the same result as Mr. Justice Puno.

Since the enactment of Commonwealth Act No. 454 on June 8, 1939, shipyards have never been considered public utilities, wheth er by legislative declaration or executive
fiat, or even in administrative practice.

True, "shipyard" is mentioned along with other business operations in the course of the definition by enumeration of "public service" in the Public Service Act. The terms
"public service" and "public utility," however, do not have the same legal meaning, at least since the enactment of C.A. No. 454. The terms are related though.

The definition of "public service" in the Public Service Act, as last amended by Republic Act No. 2677, includes every person who owns, operates, manages or controls, for hire
or compensation, and done for general business purposes, any common carrier, railroad, street railway, traction railway, sub -way motor vehicle, either for freight or
passenger, or both with or without fixed route and whatever may be its classification, freight or carrier service of any class, express service, steamboat, or steamship line,
pontines, ferries, and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine railway, marine repair shop, wharf or dock, ice plant, ice–
refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and power, petroleum, sewera ge system, wire or wireless communications
systems, broadcasting stations and other similar public services. A "public utility," on the other hand, is a business or service engaged in regularly supplying the public with
some commodity or service of public consequence such as electricity, gas, water, transportation, telephone or telegraph service. Simply stated, a public utility provides a
service or facility needed for present day living which cannot be denied to any one who is wil ling to pay for it.

Formerly, there was a statutory definition of "public utility," but it was abandoned in C.A. No. 454. The definition was instead solely applied to "public service" apparently
because it did not exactly fit the concept of public utility. It is significant in this regard that while the 1935 Constituti on which took effect on February 2, 1935 specifically
mentioned "public utility," C.A. No. 454 shifted from "public utility" to "public service" as the sole reference term in the Public Service Act.

Another dissimilarity is that a public utility requires a franchise, aside from a certificate of public necessity and convenience, for its operation, while a public service which is
not a public utility requires only a certificate of public convenience. The dichotomy in requirements flows from the enforced indeterminacy of the market fo r the service
provided by a public utility. Thus, it may be pointed out that all public utilities are public services but the converse is n ot true. This is so because the term "public utility"
connotes public use and service to the public.

A legislative declaration such as the definition by enumeration in the Public Service Act does not ipso facto render a business or service a public utility. For, as this Court held
in North Negros Sugar Co. v. Hidalgo, whether or not one is a public utility is a matter of judicial, not legislative determination.
"* * * Whether or not a given business, industry, or service is a public utility does not depend upon legislative definition, but upon the nature of the business or service
rendered, and an attempt to declare a company or enterprise to be a public utility, where it is inherently not such, is, by virtue of the guaranties of the federal constitution,
void whenever it interferes with private rights of property or contract. So a legislature cannot by mere fiat or regulatory order convert a private business or enterprise into a
public utility, and the question whether or not a particular company or service is a public utility is a judicial one, and mu st be determined as such by a court of competent
jurisdiction; * * *." (51 C.J., sec. 3, p. 5) [Emphasis supplied.]

Paraphrasing a decision13 of the United States Supreme Court, a private enterprise doing business under private contracts wit h customers of its choice and therefore not
devoted to public use cannot by legislative enactment or administrative order be converted into a public utility, for that would constitute taking of private property for public
use without just compensation in derogation of the Constitution.

Again, the categorization of a business or service a s a public utility or other wise is a judicial prerogative. Hence, this Court held in a significant number of cases that the
business or services involved were not public utilities despite contradicting legislative classifications.

In one case, we declared that an oil company is not a public utility, notwithstanding the law which categorizes petroleum operation, including refining, as a public utility:

A "public utility" under the Constitution and the Public Service Law is one organized "for hire or compe nsation" to serve the public, which is given the right to demand its
service. PETRON is not engaged in oil refining to process the oil of other parties.

In another case, we intimated that a "wharf" or "dock" as contemplated under the Public Service Act is not necessarily a public utility.

An operator of trucks who furnished service under special agreements to carry particular persons and property was held to be not a public utility as he did not hold himself
out to serve any and all persons. So is a mere owner and lessor of the equipment and facilities needed to operate a rail system not a public utility since the right to operate a
public utility may exist independently of and separately from the ownership of the facilities thereof.

An ice plant, although included in the definition of a public service under Act No. 2307, is not a public utility if it is organized solely for particular persons under strictly private
contracts, and never was devoted by its owner to public use. However, it is treated as a public utility if the ice it p roduces is sold to the public.

The test, therefore, in determining if a service is a public utility, is whether the public may enjoy it b y right or only by permission. A shipyard fails this test. As Justice Puno
points out, a shipyard is not, by nature or tradition, a public utility in much the same way as automobile or airplane manufa cturers are not public utilities.

Apart from shipyards, marine repair shops, wharves or docks, canals, irrigation systems, petroleum supply and wire or wireless broadcasting stations, although included in the
definition of "public service" in the Public Service Act, as amended, are clearly not public utilities. Se rvices which were once included in the definition of "public service" were
later on excluded from the statutory enumeration, indicating the impermanence of "public service" as a concept in the law on utilities.

Still on the legislative side, to the best of my knowledge, no person or firm has secured a legislative franchise to operate a shipyard or even applied for one. On the
administrative side, as noted by Mr. Justice Puno, the Maritime Industry Authority (MARINA) has not been empowered to issue franchis e for shipyard operation. It is
authorized under Executive Orders No. 124 and NO. 125-A, effective as of January 10 and April 13, 1987, respectively, to issue certificates of public convenience t o domestic
and water carriers. But the presidential issuances have no similar provision with respect to shipyard operation.

To reiterate, shipyards have never been in legal contemplation considered as public utilities. The promulgation of P.D. No. 6 66 in 1975 which required, in Section 1(d) thereof,
the registration of shipyards merely as such, definitely not as public utilities, served simply to remove any doubt as to their non–public utility status. Note in this regard that
MARINA was created by P.D. No. 474 on June 1, 1974, or prior to the promulgation of P.D. No. 666. And P.D. No. 474 did not authorize MARINA to issue franchise for shipyard
operation, not unlike E.O. Nos. 125 and 125-A which were promulgated after it.

The repeal of Section 1 of P.D. No. 666 by Batas Pambansa Blg. 391, enacted in 1983, did not convert shipyards into public utilities. Of course, the subsequent repeal of Batas
Pambansa Blg. 391 by E.O. No. 22631 in 1987 has effectively laid the issue to rest once and for all.

Except for this divergence, I concur in Mr. Justice Puno’s well-reasoned opinion.

I vote to GRANT respondents’ motions for reconsideration.