Contents AGAD v. MABATO ........................................................................................................................................ 2 PARTNERSHIP [1st SET] 1 (DIONNE) || D2014 TUASON v. BOLANOS .............................................................................................................................. 18 TORRES v. CA ................................................................................................................................................. 2 HEIRS OF TANG ENG KEE v. CA .......................................................................................................... 18 ARBES v. POLISTICO ................................................................................................................................... 4 AURBACH v. SANITARY WARES ......................................................................................................... 19 TOCAO v. CA ................................................................................................................................................... 6 LITONJUA v. LITONJUA .......................................................................................................................... 23 HEIRS OF JOSE LIM, represented by Elenito Lim v. JULIET VILLA LIM ............................... 7 BOURNS v. CARMAN ................................................................................................................................ 23 AGUILA v. CA .................................................................................................................................................. 9 SEVILLA v. CA ............................................................................................................................................. 24 TAN v. DEL ROSARIO ................................................................................................................................. 9 PHILEX v. MINING CORP. ...................................................................................................................... 26 MENDIOLA v. CA ....................................................................................................................................... 10 ORTEGA v. CA ............................................................................................................................................. 27 ANGELES v. SECRETARY OF JUSTICE .............................................................................................. 13 GATCHALIAN v. CIR ................................................................................................................................. 15 PASCUAL v. CIR .......................................................................................................................................... 15 OBILLOS v. CIR ........................................................................................................................................... 16 RIVERA v. PEOPLE’S BANK ................................................................................................................... 17 THE LAW ON PARTNERSHIP I. NATURE; CREATION A. DEFINITION; ESSENTIAL FEATURES B. CREATION AGAD v. MABATO (June 28, 1968) DOCTRINE: A partnership may be constituted in any form, except where immovable property or real rights are contributed thereto, in which case a public instrument shall be necessary. A contract of partnership is void, whenever immovable property is contributed thereto, if inventory of said property is not made, signed by the parties, and attached to the public instrument. NATURE: Appeal, taken by plaintiff Mauricio Agad, from an order of dismissal of the Court of First Instance of Davao, we are called upon to determine the applicability of Article 1773 of our Civil Code to the contract of partnership on which the complaint herein is based. PONENTE: Concepcion, C.J. FACTS: Plaintiff alleges that he and defendant Severino Mabato are — pursuant to a public instrument dated August 29, 1952 " — partners in a fishpond business, to the capital of which Agad contributed P1,000, with the right to receive 50% of the profits. That from 1952 up to and including 1956, Mabato who handled the partnership funds, had yearly rendered accounts of the operations of the partnership; and that, despite repeated demands, Mabato had failed and refused to render accounts for the years 1957 to 1963. Agad prayed in his complaint against Mabato and Mabato & Agad Company, filed on June 9, 1964, that judgment be rendered sentencing Mabato to pay him (Agad) the sum of P14,000, as his share in the profits of the partnership for the period from 1957 to 1963, in addition to P1,000 as attorney's fees, and ordering the dissolution of the partnership, as well as the winding up of its affairs by a receiver to be appointed. In his answer, Mabato admitted the formal allegations of the complaint and denied the existence of said partnership, upon the ground that the contract therefor had not been perfected, despite the execution of Annex "A", because Agad had allegedly failed to give his P1,000 contribution to the partnership capital. Mabato prayed, therefore, that the complaint be dismissed; that Annex "A" be declared void ab initio; and that Agad be sentenced to pay actual, moral and exemplary damages, as well as attorney's fees. Mabato filed a motion to dismiss, upon the ground that the complaint states no cause of action and that the lower court had no jurisdiction over the subject matter of the case, because it involves principally the PARTNERSHIP [1st SET] 2 (DIONNE) || D2014 determination of rights over public lands. After due hearing, the court issued the order appealed from, granting the motion to dismiss the complaint for failure to state a cause of action. This conclusion was predicated upon the theory that the contract of partnership is null and void, pursuant to Art. 1773 of our Civil Code, because an inventory of the fishpond referred in said instrument had not been attached thereto. ISSUES: The issue hinges on whether or not "immovable property or real rights" have been contributed to the partnership under consideration. HELD: NO. (Mabato alleged and the lower court held that the answer should be in the affirmative, because "it is really inconceivable how a partnership engaged in the fishpond business could exist without said fishpond property (being) contributed to the partnership." But...) RATIO/RULING: The Court said that it should be noted, however, that, as stated in Annex "A" the partnership was established "to operate a fishpond", not to "engage in a fishpond business". Moreover, none of the partners contributed either a fishpond or a real right to any fishpond. Their contributions were limited to the sum of P1,000 each. The operation of the fishpond mentioned in Annex "A" was the purpose of the partnership. Neither said fishpond nor a real right thereto was contributed to the partnership or became part of the capital thereof, even if a fishpond or a real right thereto could become part of its assets. - - - - DISPOSITION: WHEREFORE, we find that said Article 1773 of the Civil Code is not in point and that, the order appealed from should be, as it is hereby set aside and the case remanded to the lower court for further proceedings, with the costs of this instance against defendant-‐appellee, Severino Mabato. It is so ordered. VOTE: Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur. CONCURRING/DISSENTING OPINION: None. ADDITIONAL NOTES: TORRES v. CA (December 9, 1999) - - He did all of these for a total expense of P85. That the terms of a contract turn out to be financially disadvantageous to them will not relieve them of their obligations therein.” They add that respondent used the loan not for the development of the subdivision. the RTC issued its assailed Decision. he was able to effect the survey and the subdivision of the lots. By mortgaging the property. in the amount of TWENTY FIVE THOUSAND FIVE HUNDRED THIRTEEN & FIFTY CTVS. upon the execution of this contract for the property entrusted by the SECOND PARTY. Respondent claimed that the subdivision project failed. whereas. As for the profits. With the said amount. and the land was subsequently foreclosed by the bank. “Whereas. By the contract of partnership two or more persons bind themselves to contribute money. RATIO/RULING: Existence of Partnership: Petitioners deny having formed a partnership with respondent. he shall also receive a share in the profits in proportion to his capital. thereby forcing him to give up on the project.” . under the Joint Venture Agreement. the sum of: TWENTY THOUSAND (P20.” PARTNERSHIP [1st SET] 3 (DIONNE) || D2014 CA also said: “In the absence of stipulation. Petitioners: the project failed because of “respondent’s lack of funds or means and skills. was later dismissed by the trial court in an Order dated September 6. Likewise. they assert that under those very same contracts. They contend that the Joint Venture Agreement and the earlier Deed of Sale were void. Because the agreement entitled them to receive 60 percent of the proceeds from the sale of the subdivision lots. property. for 1. If only the share of each partner in the profits has been agreed upon.50) Philippine Currency. -‐The project did not push through. Philippine Currency. petitioners refused to cause the clearing of the claims. If besides his services he has contributed capital. they pray that respondent pay them damages equivalent to 60 percent of the value of the property.” Petitioners claim CA erred in concluding that the transaction between the parties was a joint venture/partnership. (P1. xxx A reading of the terms embodied in the Agreement indubitably shows the existence of a partnership pursuant to Article 1767 of the Civil Code. was to be used for the development of the subdivision. Pursuant to the contract. in favor of the FIRST PARTY. who then had it registered in his name. 1969. but in furtherance of his own company. upon respondent's motion. or industry to a common fund. CA cited Article 1979 which said “ The losses and profits shall be distributed in conformity with the agreement. the appellate court remanded the case for further proceedings. 1368 covering TCT No.700 square meters at ONE [PESO] & FIFTY CTVS. The lack of an inventory of real property will not ipso facto release the contracting partners from their respective obligations to each other arising from acts executed in accordance with their agreement. 1767. with the intention of dividing the profits among themselves. however. the SECOND PARTY. Universal Umbrella Company. as earlier stated. the FIRST PARTY had given the SECOND PARTY. petitioners. Thereafter. which. the share of each partner in the profits and losses shall be in proportion to what he may have contributed. NATURE: Petition for review on certiorari a CA decision denying MR PONENTE: Panganiban.00) Pesos. -‐Thereafter. respondent is liable for his failure to implement the project. He secured the Lapu Lapu City Council’s approval of the subdivision project which he advertised in a local newspaper. The pertinent portions of the Joint Venture Agreement read as follows: “That. -‐On appeal. T-‐0184 with a total area of 17. but the SECOND PARTY did not actually receive the payment. and additional profits or whatever income deriving from the sales will be divided equally according to the x x x percentage [agreed upon] by both parties. the share of each in the losses shall be in the same proportion. the industrial partner shall receive such share as may be just and equitable under the circumstances.009 square meters. to be sub-‐divided by the FIRST PARTY.50) Philippine Currency. (P25. DOCTRINE: Courts may not extricate parties from the necessary consequences of their acts. CA ruling: petitioners and respondents formed a partnership for the development of the subdivision. entered into a "joint venture agreement" with Respondent Manuel Torres for the development of a parcel of land into a subdivision. for sub-‐division projects and development purposes.000. -‐petitioners filed a criminal case for estafa against respondent and his wife. for and in consideration of the above covenants and promises herein contained the respective parties hereto do hereby stipulate and agree as follows: “ONE: That the SECOND PARTY signed an absolute Deed of Sale x x x dated March 5.000 which. Despite his requests. All three of them also agreed to share the proceeds from the sale of the subdivided lots. Respondent: alleged that he used the loan to implement the Agreement.000. xxx “FIFTH: That the sales of the sub-‐divided lots will be divided into SIXTY PERCENTUM 60% for the SECOND PARTY and FORTY PERCENTUM 40% for the FIRST PARTY. voluntarily offered the FIRST PARTY. who were however acquitted. but the industrial partner shall not be liable for the losses. curbs and gutters. Thus. ISSUES: WON a partnership relationship existed between the parties? HELD: Yes. “NOW THEREFORE. this property located at Lapu-‐Lapu City. which provides: “ART. he entered into a contract with an engineering firm for the building of sixty low-‐cost housing units and actually even set up a model house on one of the subdivision lots. He also caused the construction of roads. 1982. under Lot No.513. however. J. because petitioners and their relatives had separately caused the annotations of adverse claims on the title to the land. In the same breath. FACTS: -‐Sisters Antonia Torres and Emeteria Baring. which eventually scared away prospective buyers. however. was affirmed by the CA. Island of Mactan. they must bear the loss suffered by the partnership in the same proportion as their share in the profits stipulated in the contract. respondent obtained from Equitable Bank a loan of P40. they executed a Deed of Sale covering the said parcel of land in favor of respondent. they filed the present civil case which. unprecedented by our law. because this would be an excessive and unjust sanction for. be given to the charitable institutions of the domicile of the partnership. Clearly. and requiring the former to amend their complaint within a period. Purisima. Under the above-‐quoted Agreement. x x x There was therefore a consideration for the sale. the circumstances of the two cases being entirely different. We clarify. introduced to supply an obvious deficiency of the former law. 1773.. but shall upon the dissolution of the partnership. signed by the parties. . Melo. As explained by the trial court. nor state what to be done with them. the income from the said project would be divided according to the stipulated percentage." The plaintiffs were members or shareholders. sign or attach to the public instrument an inventory of the real property contributed. for PARTNERSHIP [1st SET] 4 (DIONNE) || D2014 which the land was intended to be used. First.The profits are so applied. This argument is puerile. Consideration. ET AL. which did not describe the purpose to which those profits denied the partners were to be applied. directors and secretary of said association. petitioners transferred the title to the land in the name of the respondent. if an inventory of said property is not made. Furthermore. The first one was when the same plaintiffs appeared from the order of the court below sustaining the defendant's demurrer. CA affirmed. much less approve. whenever immovable property is contributed thereto. the partnership is void. and the fact that the contractual stipulations may turn out to be financially disadvantageous will not relieve parties thereto of their obligations. and the defendants were designated as president-‐ treasurer. the proceeds of which were used for the survey and the subdivision of the land. POLISTICO (September 7. so as to include all the members of "Turnuhan Polistico & Co. Its first stipulation states that petitioners did not actually receive payment for the parcel of land sold to respondent." either as plaintiffs or as a defendants. in addition to his industry. Partnership Agreement Not the Result of an Earlier Illegal Contract Petitioners also contend that the Joint Venture Agreement is void under Article 1422 of the Civil Code. Parties cannot adopt inconsistent positions in regard to a contract and courts will not tolerate. providing that the profits obtained by unlawful means shall not enrich the partners. 1929) ADRIANO ARBES. and Gonzaga-‐Reyes concur CONCURRING/DISSENTING OPINION: none ARBES v. They cannot now disavow the relationship formed from such agreement due to their supposed misunderstanding of its terms. Second. J. petitioners themselves invoke the allegedly void contract as basis for their claim that respondent should pay them 60 percent of the value of the property. VICENTE POLISTICO. On the other hand. Petitioners Bound by Terms of Contract Courts are not authorized to extricate parties from the necessary consequences of their acts. In this case. VOTE: 3rd Division. A contract of partnership is void. in such a case. DOCTRINE: Hence the distinction made in the second paragraph of this article [in the present case 1666 but under the NCC 1770] of this Code. more properly denominated as cause. which was for the sale of the land without valid consideration. and attached to the public instrument. there is no reason. the curbs and the gutters of the subdivision and entered into a contract to construct low-‐cost housing units on the property. such as the prestation or promise of a thing or service by another.” DISPOSITION: Petition denied.. such practice. the contract manifested the intention of the parties to form a partnership. It should be stressed that the parties implemented the contract. which provides: “ART. or. depending on what momentarily suits their purpose. but in the expectation of profits from the subdivision project. he developed the roads. Respondent’s actions clearly belie petitioners’ contention that he made no contribution to the partnership.: FACTS: • This is an action to bring about liquidation of the funds and property of the association called "Turnuhan Polistico & Co. defendants-‐appellants. because it is the direct result of an earlier illegal contract. • It is well to remember that this case is now brought before the consideration of this court for the second time. the cause of the contract of sale consisted not in the stated peso value of the land. the [petitioners] acting in the expectation that. a partner may contribute not only money or property. as we have seen. The Joint Venture Agreement clearly states that the consideration for the sale was the expectation of profits from the subdivision project. Under Article 1767 of the Civil Code.. should the venture come into fruition. while respondent would give. they [would] get sixty percent of the net profits.” They contend that since the parties did not make. Vitug. but also industry. plaintiffs-‐appellees. respondent caused the subject land to be mortgaged. As noted earlier. the amount needed for general expenses and other costs. NATURE: Appeal from a judgment of CFI PONENTE: VILLAMOR. vs. Alleged Nullity of the Partnership Agreement Petitioners argue that the Joint Venture Agreement is void under Article 1773 of the Civil Code. This is a new rule. They cannot in one breath deny the contract and in another recognize it. Article 1773 was intended primarily to protect third persons. ET AL. petitioners would contribute property to the partnership in the form of land which was to be developed into a subdivision. “the land was in effect given to the partnership as [petitioner’s] participation therein. can take different forms. Thus. for depriving the partner of the portion of the capital that he contributed. and not the contributions. in default of such. to those of the province. which is to annul and without legal existence by reason of its unlawful object. o The action which may arise from said article. found the same sufficiently explained in the report and the evidence. Charitable institution. their complaint and their answer.607." and to receive whatever evidence the parties might desire to present. and it is not necessary for the said parties to base their action to the existence of the partnership. The amount should be returned to the members of the said association because they pertain to their contributions and not to profits derived from such unlawful partnership. paragraph 2 of the same article provides that when the dissolution of the unlawful partnership is decreed. commissioner to examine all the books. without any • • ISSUES: Whether the lower court erred in ordering the return of the the amount of P24. or. HELD: No. if it is considered juridically non-‐ existent. The appellants refer to article 1666 of the Civil Code. and the administrator of the partnership holding said contribution retains what belongs to others. the contract entered into can have no legal effect. during its existence as result of the business in which it was engaged. and it is self evident that what does not exist cannot be a cause of action. and in the default thereof. The defendants objected to the commissioner's report. • Appellant's contention on this point is untenable. Petitioner's contention: • If the partnership has no valid existence. is that for the recovery of the amounts paid by the member from those in charge of the administration of said partnership. Quintos. those of the province are not necessary parties in this case. and accounts of "Turnuhan Polistico & Co. no charitable institution is a necessary party in the present case of determination of the rights of the parties. o And as said contrast does not exist in the eyes of the law. and sentencing the defendants jointly and severally to return the amount of P24. but must be given to some charitable institution. rendered judgment. o Hence. The commissioner rendered his report. the profits shall be given to charitable institutions of the domicile of the partnership. • This court held then that in an action against the officers of a voluntary association to wind up its affairs and enforce an accounting for money and property in their possessions. as a party defendant • If the partnership has no valid existence. • The article cited above permits no action for the purpose of obtaining the earnings made by the unlawful partnership. each one's contribution? COURT: • Ricci: The partner who limits himself to demanding only the amount contributed by him need not resort to the partnership contract on which to base his action. and to the rest of the members of the said association rather than order it to be given to charitable institutions. o According to said article. should be included. to those of the province. as Manresa remarks." is unlawful.607. and in that case.. o that the partner makes his contribution. and must be established for the common benefit of the partners. i. which provides: "A partnership must have a lawful object. the profits cannot inure to the benefit of the partners. of the Insular Auditor's Office. the charitable institution of the domicile of the partnership.The case having been remanded to the court of origin. both parties amend. the partner will have to base his action upon the partnership contract. in the case of unlawful partnership. the contract entered into can have no legal effect.80 to the plaintiffs in this case. but the trial court. how can it give rise to an action in favor of the partners to judicially demand from the manager or the administrator of the partnership capital. and by agreement of the parties. having examined the reasons for the objection. respectively.80 to the plaintiffs in this case. . RATIO/RULING: Petitioner's contention: • because the partnership is an unlawful partnership. to breathe the breath of life into a partnership contract with an objection forbidden by law. each one's contribution? COURT: • The appellants allege that the necessary party. was not impleaded. in default of such. how can it give rise to an action in favor of the partners to judicially demand from the manager or the administrator of the partnership capital. And hence. and in that case. the purpose from which the contribution was made has not come into existence. which passes to the managing partner for the purpose of carrying on the business or industry which is the object of the partnership. and accepting it. documents. and to the rest of the members of the said association PARTNERSHIP [1st SET] 5 (DIONNE) || D2014 When the dissolution of an unlawful partnership is decreed. or in other words. if it is considered juridically non-‐ existent.e. but on the fact that of having contributed some money to the partnership capital. it is not necessary that all members of the association be made parties to the action. some charitable institution to whom the partnership funds may be ordered to be turned over. the court appointed Amadeo R. because for the purpose. holding that the association "Turnuhan Polistico & Co. an oral contract of partnership is as good as a written one. Furthermore. for which reason he is not bound to return it and he who has paid in his share is entitled to recover it. wrote Belo a letter. The agreement was not reduced to writing on the strength of Belo's assurances that he was sincere. The following day. Ayala Avenue. she received a note from Lina T. or. 2000) PARTNERSHIP [1st SET] 6 (DIONNE) || D2014 DOCTRINE: It may be constituted in any form. upon being duly identified in the manner that it may deem proper. affirmed with costs against the appellants. On April 5. Belo acted as capitalist. Avanceña. which did not describe the purpose to which those profits denied the partners were to be applied. Where no immovable property or real rights areinvolved. but shall upon the dissolution of the partnership.October 10. and Villa-‐Real. a complaint for sum of • • • DISPOSITION: The judgment appealed from. C. o The profits are so applied. since this partition or distribution of the profits is one of the juridical effects thereof.. TOCAO v.00. Anay consulted her lawyer. and hence the partners should reimburse the amount of their respective contributions. 1987. shows that in consequences of said exclusion. with office at 712 Rufino Building. unprecedented by our law. the partner would have to base his action on the contract which is null and void. (3) thirty percent (30%) of the sales she would make. to those of the province. in default of such. vice-‐president for sales. upon the dissolution of the unlawful partnership. . by reason of its illicit object. 88-‐509. o Wherefore considering this contract as non-‐existent. who. further. a manufacturer of kitchen cookwares in Wisconsin. Anay attempted to contact Belo.S. and Anay as head of the marketing department and later. because this would be an excessive and unjust sanction for. business or speculation which is the object of the partnership o therefor. in order to demand the proportional part of the said profits. for depriving the partner of the portion of the capital that he contributed. Anay still received her fivepercent (5%) overriding commission up to December 1987. that the defendants shall deposit this sum of money and other documents evidencing uncollected credits in the office of the clerk of the trial court. the amounts contributed are to be returned by the partners. VOTE: EN BANC. 1988. in turn. a publicinstrument is necessary only where immovable property or real rights are contributed thereto. FACTS: Petitioner William Belo introduced respondent NenitaAnay to petitioner Marjorie Tocao. Theparties agreed further that Anay would be entitled to: (1) ten percent (10%) of the annual net profits of the business. the circumstances of the two cases being entirely different. Anay having secured the distributorship of cookware products from the WestBend Company and organized the administrative staff and the sales force. Under the joint venture. it cannot give rise to the necessary action.A. it would be immoral and unjust for the law to permit a profit from an industry prohibited by it. • consideration. But this is not the case with regard to profits earned in the course of the partnership. Nenita A. there is no reason. 1988 and the audit of the company to determine her share in the net profits. should be. Still. Johnson. 1988. in order that said court may distribute them among the members of said association. she did not receive the same commission although thecompany netted a gross sales of P13. When her letterswere not answered. as it is hereby. concur. This implies that since a contract of partnership is consensual. This is a new rule.360. and (4) two percent(2%) for her demonstration services. Belo made good his monetary commitments to Anay. Johns. but the fact that said contributions are not included in the disposal prescribed profits. be given to the charitable institutions of the domicile of the partnership. nor state what to be done with them. in such a case. Cruz. which must be the basis of the judicial complaint. Hence the distinction made in the second paragraph of this article of this Code. because it only deals with the disposition of the profits. the general law must be followed. the cookware business took off successfully.. JJ. as we have seen. being in accordance with law.J. . They operated underthe name of Geminesse Enterprise. 1988 to February 5. The parties agreed to useAnay's name in securing distributorship of cookware from West Bend Company. CA (October 4. So ordered.80 from the date of the decision of the court. provided. what matters is that the parties have complied with the requisites of a partnership. Anay filed Civil Case No.Makati City.300.dependable and honest when it came to financial commitments. introduced to supply an obvious deficiency of the former law. J. and provided. because they do not constitute or represent the partner's contribution but are the result of the industry.607. and not the contributions. that letter was not answered. The following year. U. the defendants shall pay the legal interest on the sum of P24. Our Code does not state whether. Anay learned that Marjorie Tocao had signed a letteraddressed to the Cubao sales office to the effect that she was no longer the vice-‐ president of GeminesseEnterprise. Romualdez. She wrote him twice to demand her overriding commissionfor the period of January 8. that Marjorie Tocao had barred her from holding office and conductingdemonstrations in both Makati and Cubao offices. NATURE: Petition for review on certiorari PONENTE: YNARES-‐SANTIAGO. Tocao aspresident and general manager. Street. who conveyed her desire to enter into a jointventure with her for the importation and local distribution of kitchen cookwares. On October 9. however. marketing manager. providing that the profits obtained by unlawful means shall not enrich the partners. (2) overridingcommission of six percent (6%) of the overall weekly production. a sole proprietorship registered in Marjorie Tocao's name. In this case. Jose's heirs.00. Thereafter.J. Jose. PONENTE: Nachura. to pay private respondent moral damages in the amount of P50. widow of the late Elfledo Lim.000. Jose managed the operations of this trucking business until his death. and (c) there was a jointinterest in the profits. JULIET VILLA LIM (March 3. to pay private respondent five percent (5%) overriding commission for the one hundred and fifty (150) cookware sets available for disposition since the time private respondent was wrongfully excluded from the partnership by petitioners. Petitioners alleged that Jose was the liaison officer of Interwood Sawmill. FACTS: 1. The fact that there appears to be no record in theSecurities 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 partnership. This Court cannot set aside factual findings of such courts absent any showing that there is no evidence to support theconclusion drawn by the courta quo. amounted to P32. DISPOSITION: WHEREFORE. Petitioners are the heirs of the late Jose Lim. (Chairman).000. J. To be considered a juridical personality.00 and attorney’s fees in the amount of P25.. Petitioners are ordered. Where no immovable property or real rights areinvolved. and (2) intention on the part of the partners to divide the profits among themselves. Accounting and Damages against respondent Juliet Villa Lim (respondent). exemplary damages in the amount of P50.000. apartnership must fulfill these requisites: (1) two or more persons bind themselves to contribute money. jointly and severally. The trial court held that therewas indeed an oral partnership agreement between the plaintiff and the defendants. 1768. 3. ISSUES:Whether or not a partnership exists HELD &RATIO/RULING: Yes. 2004. both the trial court and the Court of Appeals are one in ruling that petitioners and privaterespondent established a business partnership. even in case of failure to complywith the requirements of article 1772. Petitioners are ordered to submit to the Regional Trial Court a formal account of the partnership affairs for the years 1987 and 1988. The issue of whether or not a partnership exists is a factual matter which is within the exclusive domain of both the trial andappellate courts. concur. 2. a publicinstrument is necessary only where immovable property or real rights are contributed thereto. property or industry to a commonfund. for the period covering January 8. pursuant to Article 1809 of the Civil Code. jointly and severally. which reversed and set aside the decision of the Regional Trial Court (RTC) of Lucena City. first paragraph.. together with his friends Jimmy Yu and Norberto Uy formed a partnership to engage in the trucking business. The shares in the partnership profits and income that formed part of the estate of Jose were held in trust by Elfledo. Petitioners are ordered. (b) a common fund was established through contributions consisting of money and industry. and Pardo. The partnership has a juridical personality separate and distinct from that of each of the partners. Kapunan. NATURE: Petition for Review on Certiorari under Rule 45 of the Rules of Civil Procedure. Jr. what matters is that the parties have complied with the requisites of a partnership. in order to determine private respondent’s ten percent (10%) share in the net profits of the partnership. Davide. 4. Petitioners appeal to the Court of Appealswas dismissed. an oral contract of partnership is as good as a written one. It may be constituted in any form. JJ. assailing the Court of Appeals (CA) Decision dated June 29. and the parties are ordered to effect the winding up and liquidation of the partnership pursuant to the pertinent provisions of the Civil Code. VOTE: 1st division. Petitioners are ordered. and partners agreed to continue the business under the management of Elfledo.000. based on the following: (a) there was an intention tocreate a partnership. Tocao and William Belo before the Regional Trial Court of Makati. with petitioners' authority for Elfledo to use. Branch 140. This case is remanded to the Regional Trial Court for proper proceedings relative to said dissolution. jointly and severally. HEIRS OF JOSE LIM. represented by Elenito Lim.00. 2.00. to pay private respondent overriding commission on the total production which. the instant petition for review on certiorari is DENIED. who was the eldest son of Jose and Cresencia. . dated April 12. 1988 to February 5. purchase or acquire properties using said funds. as follows -‐-‐-‐ PARTNERSHIP [1st SET] 7 (DIONNE) || D2014 1. 1988. 2005. The appealed decisions of the Regional Trial Court and the Court of Appeals are AFFIRMED with MODIFICATIONS. including Elfledo. 2010) DOCTRINE: A demand for periodic accounting is evidence of a partnership. They filed a Complaint for Partition. C. This implies that since a contract of partnership is consensual. represented by Elenito Lim v. The partnership among petitioners and private respondent is ordered dissolved. moneywith damagesagainst Marjorie D. The pertinent provision of the Civil Code on the matter states:Art.. Puno. This Court finds no reason to rule otherwise. Their Motion for Reconsideration was denied by the Court of Appeals for lack of merit. without their consent and approval. indicating that what he actually received were shares of the profits of the business. who paid for them in installments. without any intervention or opposition whatsoever from any of petitioners herein. leaving respondent as his sole surviving heir. None of the petitioners. 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. Applying the legal provision to the facts of this case. d. and to surrender the administration thereof. 5. But that testimony is just one piece of evidence against respondent. 8. Thus. 7. Yes 9. petitioners required respondent to submit an accounting of all income. particularly the nine trucks of the partnership. demanded periodic accounting from Elfledo during his lifetime. SC agrees with CA’s findings that the testimonities prove that Elfledo was not just a hired help but one of the partners in the trucking business. All of the properties. respondent talked to Jimmy and to the heirs of Norberto. b. Petitioners alleged that Elfledo was never a partner or an investor in the business and merely supervised the purchase of additional trucks using the income from the trucking business of the partners. which belonged to the estate of Jose. then upon his death the partnership should have 4. and the partnership with Jimmy and Norberto ceased upon his demise. At this juncture. and the partnership and its business not only continued but also flourished. he left no known assets. . as share in the partnership. If it were true that it was Jose Lim and not Elfledo who was the partner. Norberto's wife. Court of Appeals is enlightening. A partnership exists when two or more persons agree to place their money. Respondent also claimed that per testimony of Cresencia. Respondent maintained that all the properties involved in this case were purchased and acquired through her and her husband’s joint efforts and hard work. and (2) all the properties acquired by Elfledo and respondent form part of the estate of Jose. Petitioners claimed that respondent took over the administration of the properties. are indicative of the fact that Elfledo was a partner and a controlling one at that. Therein. because the alleged partnership was never formally organized. Petitioners heavily rely on Jimmy's testimony. the fact that its properties were placed in his name. Claiming that they are co-‐owners of the properties. RATIO/RULING: 1. active and visible in the running of its affairs from day one until this ceased operations upon his demise. and that he was not paid salary or other compensation by the partners. the following circumstances tend to prove that Elfledo was himself the partner of Jimmy and Norberto: a. wielding absolute control. Notable too that Jose Lim died when the partnership was barely a year old. e. as heirs of Jose. the alleged partner. administration and management of the partnership and its business. having been derived from the alleged partnership. as she could no longer run the business. Respondent submitted that these are conjugal partnership properties. and without any participation or contribution from petitioners or from Jose. The evidence presented by petitioners falls short of the quantum of proof required to establish that: (1) Jose was the partner and not Elfledo. When Elfledo and respondent got married. PARTNERSHIP [1st SET] 8 (DIONNE) || D2014 The best evidence would have been the contract of partnership or the articles of partnership. the trucking business started to falter. Cresencia testified that Jose gave Elfledo P50.00. Respondent traversed petitioners' allegations and claimed that Elfledo was himself a partner of Norberto and Jimmy. a demand for periodic accounting is evidence of a partnership. there is none in this case. Unfortunately. Jimmy testified that Elfledo did not receive wages or salaries from the partnership. SC affirms the CA decision. Respondent also alleged that when Jose died. 6. The extent of his control. the partnership only had one truck. having been derived from Jose's alleged partnership with Jimmy and Norberto. 5. thus. ISSUES: WON Elfledo Lim was a partner in the business HELD: 1. labor. 8. Jose gave Elfledo capital in an informal partnership with Jimmy and Norberto. profits and rentals received from the estate of Elfledo. When Norberto was ambushed and killed. However. Paquita Uy. which were all registered in Elfledo's name. Jimmy suggested that three out of the nine trucks be given to him as his share. she had the right to refuse to render an accounting for the income or profits of their own business. the business flourished. it had nine trucks. Elfledo ran the affairs of the partnership. 7. while the other three trucks be given to the heirs of Norberto. By the time the partnership ceased. and skill in lawful commerce or business. TC: favoured petitioners CA: reversed the decision of TC 2. with the understanding that there shall be a proportionate sharing of the profits and losses among them. 3. Elfledo died. 3. we cited Article 1769 of the Civil Code. Respondent also stressed that Jose left no properties that Elfledo could have held in trust. It must be considered and weighed along with petitioners' other evidence vis-‐à-‐vis respondent's contrary evidence. 6. on a date that coincided with the payment of the initial capital in the partnership. was not interested in the vehicles. power and authority. When Elfledo died due to a heart attack. effects. c. and thus. the SC’s ruling in Heirs of Tan Eng Kee v. were registered in the name of Elfledo. but through the efforts of Elfledo. the filing of this case. As repeatedly stressed in Heirs of Tan Eng Kee. 4. Respondent refused.000. she sold the same to respondent. 9. Furthermore. Co. Co. and the Memorandum of Agreement was executed between private respondent. “…Amending Section 21 and 29 of the National Internal Revenue Code. A violation of this rule will result in the dismissal of the complaint. This ruling is now embodied in Rule 3. DEL ROSARIO (October 3. 1994) DOCTRINE: (see notes below) NATURE: Consolidated case.. ISSUE: WON the petitioner is the real party in interest. Aguila & Sons. Hence. or illegal purposes. unfair. petitioner caused the cancellation of TCT and the issuance of the new certificate of title in the name of the partnership. Ø Petitioner now contends that he is not the real party in interest but A. Co. which should be impleaded in any litigation involving property registered in its name. and A. it is the partnership. Hence. under which the complaint in this case was filed.” Ø They alleged that this title was in direct violation of Section 26 (1) and 28 (1) in Article VI of the 1987 Constitution. VOTE: All concur C. SEPARATE JURIDICAL PERSONALITY AGUILA v.C. Aguila & Co. Any decision rendered against a Ø PARTNERSHIP [1st SET] 9 (DIONNE) || D2014 person who is not a real party in interest in the case cannot be executed. or illegal purposes.. In this case.C. J. Ø Rule 3. as a separate juridical entity. Aguila & Sons. FACTS: Ø This is a consolidated case involving the constitutionality of RA 7496 or the Simplified Net Income Taxation (SNIT) scheme. 1768 of the Civil Code. CA FACTS: Ø Petitioner is the manager of A. or who is entitled to the avails of the suit. Ø As private respondent failed to redeem the property within the prescribed period.C. the instant Petition is DENIED. not its officers or agents. unfair. Section 2 of the Rules of Court of 1964. TAN v.C. a complaint filed against such a person should be dismissed for failure to state a cause of action. Section 2 of the 1997 Revised Rules of Civil Procedure. a partnership engaged in lending activities. Ø Petitioners claim to be taxpayers adversely affected by the continued implementation of the SNIT.C. Two special civil actions for prohibition PONENTE: Vitug. Aguila & Sons. Aquila & Sons involving a pacto de retro sale of a house & lot. the title to the subject property is in the name of A. Aguila & Sons. DISPOSITION: WHEREFORE. 2005 is AFFIRMED. private respondent has not shown that A. Ø Private respondent Felicidad Abrogar entered into a MOA w/ A. they contended that the House Bill which eventually became RA 7496 is a misnomer or deficient because it was named as “Simplified Net Income Taxation Scheme for the Self-‐Employed and Professionals Engaged in the Practice of their Profession” while the actual title contains the said words with the additional phrase. Co. against which this case should have been brought. Moreover. The assailed Court of Appeals Decision dated June 29." A real party in interest is one who would be benefited or injured by the judgment. with the consent of her late husband. The partners cannot be held liable for the obligations of the partnership unless it is shown that the legal fiction of a different juridical personality is being used for fraudulent. HELD: No.C. provided that "every action must be prosecuted and defended in the name of the real party in interest. Ø Private respondent filed a petition for a declaration of the nullity of the deed of sale and a criminal complaint for forgery against petitioner alleging that the signature of her husband was a forgery because he was already dead when the deed was supposed to have been executed. a partnership has a juridical personality separate and distinct from that of each partner. The petitioner also stressed that it violates the equal protection clause as it only imposed taxes upon one who . Ø Art.. represented by petitioner. is being used for fraudulent. Costs against petitioners. Ø In the 1st case. Jr. unlike an ordinary business partnership (which is treated as a corporation for income tax purposes and so subject to the corporate income tax).R. Estate under Judicial Settlement and Irrevocable Trust. Ordinary business partnerships. Corporations. o It is neither violative of equal protection clause due to the existence of substantial difference between one who practice his profession alone and one who is engaged to proprietorship. Padilla and Bidin. in this context. YES HELD: 1.-‐ Petitioners cited the deliberations in the HOR regarding the implementation of the said rule in which it was shown that framers did not intend for the bill to be applicable to business corporations or partnerships PARTNERSHIP [1st SET] 10 (DIONNE) || D2014 return mainly for administration and data). the general professional partnership is deemed to be no more than a mere mechanism or a flow-‐through entity in the generation of income by. must be formed for the sole purpose of exercising a common profession. Bellosillo. otherwise. The only other exempt partnership is a joint venture for undertaking construction projects or engaging in petroleum operations pursuant to an operating agreement under a service contract with the government (see Sections 20. Puno.. Melo. o The court would have appreciated the contention of the petitioner if RA 7496 was an independent law. . (G.J. and the ultimate distribution of such income to. In the 2nd case. the SNIT applies to partners in general professional partnerships... it is germane to the purpose of the law and.” Under the Tax Code on income taxation. But since it is attached to a law that has already classified taxpayers. but on the partners themselves in their individual capacity computed on their distributive shares of partnership profits. all individuals deriving income from any source whatsoever are treated in almost invariably the same manner and under a common set of rules. applies to all things of equal conditions and of same class. the SC said that RA 7496 is just an amendatory provision of the code of taxpayers where it classifies taxpayers in to four main groups: Individuals.” General professional partnerships are “exempt partnerships.R. A general professional partnership1. 109289). o Under the present income tax system. Constitutionality of RA 7496 o The SC ruled in the negative.. which is to say. Cruz. respectively. Feliciano. it is subject to tax as an ordinary business partnership or. The income tax is imposed not on the professional partnership. Quiason. concur. JJ. 23 and 24. is not itself an income taxpayer. Regalado. DISPOSITIVE: WHEREFORE. Davide. there is no violation of equal protection clause. No. practice his profession alone and not to those who are engaged to single proprietorship. o Although the general professional partnership is exempt from the payment of taxes (but it still has an obligation to file an income tax 1 A general professional partnership. This is anchored on the administrative interpretation of public respondents that would apply SNIT topartners in general professional partnerships. WON in RA 7496. Romero. Kapunan and Mendoza. the petitions are DISMISSED. C. as a corporation and thereby subject to the corporate income tax. which is tax exempt. o Further. no part of the income of which is derived from its engaging in any trade business. NO 2. No special pronouncement on costs. CA Ø Ø ISSUE: 1. the partners themselves are liable for the payment of income tax in their individual capacity computed on their respective and distributive shares of profits. b. no matter how created or organized. MENDIOLA v. are “taxable partnerships. National Internal Revenue Code). The said law is not arbitrary. VOTING: Narvasa. NOTES: Differences between general professional partnerships and ordinary business partnerships: a. are on leave. 2. JJ. they argued that respondents have exceeded their rule-‐ making authority in applying SNIT to general professional partnerships by issuing Revenue Regulation 2-‐93 to carry out the RA. No. 109446). WON RA 7496 is unconstitutional (G. Application of SNIT to partners in general professional partnerships o There is no distinction in income tax liability between a person who practices his profession alone or individually and one who does it through a partnership (whether registered or not) with others in the exercise of a common profession. each of the individual partners. . private respondent Pacfor proposed to establish its representative office in the Philippines. it follows that he and Pacfor likewise own. because the latter is merely Pacfor-‐USA's representative office and not an entity separate and distinct from Pacfor-‐USA. ARSENIO T. This doctrine is based on the following considerations: (1) that the mutual agency between the partners. or joint interest in partnership property is absent in the relations between petitioner and private respondent Pacfor. in October 2000. Inc. and all notices affecting the corporation. Private respondent will establish a Pacfor representative office in the Philippines. MENDIOLA vs. is equally owned on a 50-‐50 equity by ATM and Pacfor-‐usa. whereby the corporation would be bound by the acts of persons who are not its duly appointed and authorized agents and officers. NATIONAL LABOR RELATIONS COMMISSION. Mendiola (ATM). Petitioner's base salary and the overhead expenditures of the company shall be borne by the representative office and funded by Pacfor/ATM. Inc." petitioner insisted that he and Pacfor equally own Pacfor Phils. INC. replied that petitioner is not a part-‐owner of Pacfor Phils. the New Civil Code regards a partner as a co-‐owner of specific partnership property. hence.18 Private respondent Pacfor likewise sent letters to its clients in the Philippines.. files. and petitioner ATM will be its President. The Side Agreement outlines the business relationship of the parties with regard to the Philippine operations of Pacfor. that he would have been better off remaining as an independent agent or representative of Pacfor-‐USA as ATM Marketing Corp. would be inconsistent with the policy of the law that the corporation shall manage its own affairs separately and exclusively. FACTS: Private respondent Pacific Forest Resources. This essential element. the community of interest. as well as commissions allegedly due him. xxx the parties in this case. Petitioner raised other issues. PONENTE: Puno. a corporation cannot become a member of a partnership in the absence of express authorization by statute or charter. and "not a branch office" in the Philippines to save on taxes. It also designated petitioner as its resident agent in the Philippines. records." with petitioner Arsenio T. COURT OF APPEALS. documents."11 Petitioner presumably knew of this arrangement from the start. seeking confirmation of his 50% equity of Pacfor Phils. 2006) DOCTRINE: In a partnership.000 per annum. Private respondent Pacfor. merely shared profits. to be known as Pacfor Phils. it is not one of partnership. such as the rentals of office furniture. The issues were not resolved. Each partner possesses a joint interest in the whole of partnership property. and/or CELLMARK AB (July 31. It is a subsidiary of Cellulose Marketing International (organized in Sweden) Private respondent Pacfor entered into a "Side Agreement on Representative Office known as Pacific Forest Resources (Phils. The Side Agreement was amended through a "Revised Operating and Profit Sharing Agreement for the Representative Office Known as Pacific Forest Resources (Philippines). In fact. Privatre respondent Pacfor through counsel ordered petitioner to turn over to it all papers. in which each party has a proprietary interest. The property or stock of the partnership forms a community of goods. company car. and. (Pacfor) is a corporation organized and existing under the laws of California. Besides." while the profits and commissions will be shared among them. PARTNERSHIP [1st SET] 11 (DIONNE) || D2014 In its application (to the SEC).). (2) that such an arrangement would improperly allow corporate property to become subject to risks not contemplated by the stockholders when they originally invested in the corporation. In July 2000. This alone does not make a partnership." where the salary of petitioner was increased to $78. since Pacfor Phils. Petitioner claimed that he was all along made to believe that he was in a joint venture with them. "It's simply a 'theoretical company' with the purpose of dividing the income 50-‐50. advising them not to deal with Pacfor Phils. On the basis of the "Side Agreement. petitioner wrote Pacfor-‐USA demanding payment of unpaid commissions and office furniture and equipment rentals. the members become co-‐owners of what is contributed to the firm capital and of all property that may be acquired thereby and through the efforts of the members. or co-‐ownership of. having been the one to propose to private respondent Pacfor the setting up of a representative office. J. Petitioner construed these directives as a severance of the "unregistered partnership" between him and Pacfor. a common fund. If the relation does not have this feature. on a . and other materials in his or ATM Marketing Corporation's possession that belong to Pacfor or Pacfor Phils then to remit more than 300k xmas giveaway fund for clients of Pacfor Phil and finally Pacfor withdraw all its offers of settlement and ordered petitioner to transfer title and turn over to it possession of the service car. and the termination of his employment as resident manager of Pacfor Phils. Thus. PACIFIC FOREST RESOURCES. Both agreements show that the operational expenses will be borne by the representative office and funded by all parties "as equal partners. Phils. salary of the employees. petitioner wrote the Vice President for Asia of Pacfor. PHILS. USA. authorized to accept summons and processes in all legal proceedings. through its President. besides the dollar salary agreed upon by the parties. MR denied Issues: Was there an employer-‐employee relationship or a partnership? Can both exist at the same time? There was an employer employee relationship but no partnership Was he constructively dismissed? (Not important so omitted) YES. and demanded payment of his separation pay. Petitioner insists that an industrial partner may at the same time be an employee of the partnership. PARTNERSHIP [1st SET] 12 (DIONNE) || D2014 CA: Affirmed holding that "the legal basis of the complaint is not employment but perhaps partnership. Inc. is simply a "theoretical company" for the purpose of dividing the income 50-‐50. The property or stock of the partnership forms a community of goods. finding there was constructive dismissal. the New Civil Code regards a partner as a co-‐owner of specific partnership property. 2001 decision of the labor arbiter. the community of interest. wherein he was the signatory to the lease agreement. If the relation does not have this feature. provided there is such an agreement. Inc. This alone does not make a partnership. He also reiterated his demand for unpaid commissions. co-‐ownership. In fact. or co-‐ownership of. it is not one of partnership. private respondent Pacfor virtually deprived petitioner of his job by the gradual diminution of his authority as resident manager. now occupies Pacfor Phils. it concluded that petitioner is not an employee of private respondent Pacfor. and also an employee of the partnership. Private respondent directed petitioner to explain why he should not be disciplined for serious misconduct and conflict of interest.' office for operations of HEPI LA: ruled in favor of petitioner. private respondent Pacfor's President established this fact when he said that Pacfor Phils." He likewise informed private respondent Pacfor that ATM Marketing Corp. or joint interest in partnership property is absent in the relations between petitioner and private respondent Pacfor. was to maintain the security of its business transactions and communications was rendered meaningless.. Private respondent also accused petitioner of disloyalty and representation of conflicting interests for having continued using the Pacfor Phils." We hold that petitioner is an employee of private respondent Pacfor and that no partnership or co-‐ownership exists between the parties. Private respondent Pacfor charged petitioner with willful disobedience and serious misconduct for his refusal to turn over the service car and the Christmas giveaway fund which he applied to his alleged unpaid commissions. Thus. Petitioner's position as resident manager whose duty. Besides. the lessor of the office premises of Pacfor Phils. Petitioner denied the charges. a common fund. Private respondent also alleged loss of confidence and gross neglect of duty on the part of petitioner for allegedly allowing another corporation owned by petitioner's relatives." Hence. He reiterated that he considered the import of Pacfor President’s letters as a "cessation of his position and of the existence of Pacfor Phils. Petitioner is not a part-‐owner of Pacfor Phils. MR denied.. Furthermore. charged petitioner anew with serious misconduct for the latter's alleged act of fraud and misrepresentation in authorizing the release of an additional peso salary for himself. Each partner possesses a joint interest in the whole of partnership property. and "not a branch office" in the Philippines to save on taxes. This essential element. to use the same telephone and facsimile numbers of Pacfor. William Gleason.' office premises. By directing petitioner to turn over all office records and materials. he did not renew the lease contract with Pulp and Paper. which. but a full co-‐owner (50/50 equity). He set aside the July 30. High End Products. This doctrine is based on the following considerations: (1) that the mutual agency between the partners. Ratio: Petitioner argues that he is an industrial partner of the partnership he formed with private respondent Pacfor. in this case. NLRC: in favor of Private respondent Pacfor. among others. for lack of jurisdiction and lack of merit. to possibly steal and divert the sales and business of private respondent. is the "Side Agreement" and the "Revised Operating and Profit Sharing Agreement. He stressed that petitioner knew of this arrangement from the very start. having been the one to propose to private respondent Pacfor the setting up of a representative office. Petitioner filed his complaint for illegal dismissal. In a partnership. Pacfor Phils. (HEPI). and proposed to offset these with the remaining Christmas giveaway fund in his possession. a corporation cannot become a member of a partnership in the absence of express authorization by statute or charter. the Labor Code cannot apply. Private respondent Pacfor placed petitioner on preventive suspension and ordered him to show cause why no disciplinary action should be taken against him. recovery of separation pay. and payment of attorney's fees with the NLRC. the parties in this case. It held there was no employer-‐employee relationship between the parties. Based on the two agreements between the parties. whereby the corporation would be bound by the acts of persons who are not its duly appointed . the members become co-‐owners of what is contributed to the firm capital and of all property that may be acquired thereby and through the efforts of the members. regardless of whether he may have retained copies. or independent contractorship. in which each party has a proprietary interest. merely shared profits. 50/50 basis.' office furniture and equipment and the service car. . the petition is GRANTED. clearly possesses such right of control. Secretary of Justice and Felino Mercado. Third. The Hon. a representative of Pacfor. private respondent Pacfor replied to the client's request for an invoice payment extension. serious misconduct. when it withdrew all its offers of settlement and ordered petitioner to transfer title and turn over to it the possession PARTNERSHIP [1st SET] 13 (DIONNE) || D2014 of the service car. only an agent of the corporation. Second. This right of control was exercised by private respondent Pacfor during the period of November to December 2000. Inc. private respondent Pacfor has the power of control over the means and method of petitioner in accomplishing his work. to last for 5 years.000.000 per annum which was later increased to $78. as stipulated in their Side Agreement.43 In the instant case. private respondent Pacfor. Garcia. advising them not to deal with petitioner and/or Pacfor Phils. 2003 Decision in CA-‐G. and authorized agents and officers. and. it was private respondent Pacfor which selected and engaged the services of petitioner as its resident agent in the Philippines. SO ORDERED. Azcuna. and (d) the employer's power to control the employee's conduct. and DAVCOR. Laguna and owned by Juan Sanzo o The parties agreed that Mercado would administer the ands and complete the necessary paperwork . A partnership may exist even if the partners do not use the words “partner” or “partnership. when it directed petitioner to turn over to it all records of Pacfor Phils.R. as employer. In its letter to DAVCOR. affirming the December 20.” NATURE: Special civil action. is. The most important element is the employer's control of the employee's conduct. and formulated a revised payment program for DAVCOR. and it is not the actual exercise of the right by interfering with the work. exactly so. an employer-‐employee relationship is present in the case at bar. as may be gleaned through the various memoranda it issued against petitioner.. but the right to control. The July 30. The principal consideration is whether the employer has the right to control the manner of doing the work. 2001 Decision of the National Labor Relations Commission. FACTS: • Angeles spouses filed a criminal complaint for estafa against Mercado. as private respondent Pacfor's resident agent in the Philippines. which constitutes the test of the existence of an employer-‐employee relationship. nor does it affect the partnership’s juridical personality.J. No such authorization has been proved in the case at bar. and ordering him to show cause why no disciplinary action should be taken against him. private respondent Pacfor holds the power of dismissal. J. (This part goes into the employer-‐employee relationship bit.00 representing an alleged increase in petitioner's salary shall be deducted from the grant of separation pay for lack of evidence. particularly Intercontinental Paper Industries. and. but also as to the means and methods to accomplish it.000. I don’t think it’s important but I included it na din if ever magtanong re: paano nagging employee) Be that as it may. (2) that such an arrangement would improperly allow corporate property to become subject to risks not contemplated by the stockholders when they originally invested in the corporation. and not to the actual exercise thereof. petitioners. including willful disobedience. SP No. v. covering 8 parcels of land planted with fruit-‐bearing lanzones trees in Nagcarlan. private respondent Pacfor pays petitioner his salary amounting to $65. DISPOSITIVE: IN VIEW WHEREOF. 2001 Decision of the Labor Arbiter isREINSTATED with the MODIFICATION that the amount of P250. This is one unmistakable proof that private respondent Pacfor exercises control over the petitioner. Petitioner. The power of control refers merely to the existence of the power. Certiorari. would be inconsistent with the policy of the law that the corporation shall manage its own affairs separately and exclusively. First. are ANNULED and SET ASIDE. not only as to the result of the work to be done. who transacts business. and gross neglect of duty. 2003 Resolution. It was also during this period when private respondent Pacfor sent letters to its clients in the Philippines. (c) the power of dismissal. respondents DOCTRINE:The purpose of registration of the contract of partnership with the SEC is to give notice to third parties. Corona. placing the latter on preventive suspension while charging him with various offenses. The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee. 71028 and July 30. SECRETARY OF JUSTICE (July 29. we hold that on the basis of the evidence. J.. their brother-‐in-‐law o Claimed that Mercado convinced them to enter into a contract of antichresis. The Court of Appeals' January 30. Failure to register the contract of partnership does not affect the liability of the partnership and of the partners to third persons. when it ordered petitioner to remit the Christmas giveaway fund intended for clients of Pacfor Phils. concur ANGELES v.44 In the case at bar. all the foregoing elements are present. (b) the payment of wages. 2005) Oscar Angeles and Emerita Angeles. and accepts service on its behalf. VOTE: Sandoval-‐Gutierrez. Lastly and most important. PONENTE: Carpio. W/N a partnership existed between Mercado and the Angeles spouses -‐ Yes 3. saying that the document evidencing the contract of antichresis executed in the name of the Mercado spouses. Laguna. the Angeles spouses asked for an accounting from Mercado. • The Angeles spouses’ position that there is no partnership because of the lack of a public instrument indicating the same and a lack of registration with the SEC holds no water o The Angeles spouses contributed money to the partnership and not immovable property o Mere failure to register the contract of partnership with the SEC does not invalidate a contract that has the essential requisites of a partnership. the co-‐partner’s liability is civil in nature o PARTNERSHIP [1st SET] 14 (DIONNE) || D2014 ISSUES/HELD: 1. The purpose of registration is to give notice to third parties. of Justice. it was more likely that the Angeles spouses knew from the very start that the questioned document was not really in their names o A partnership truly existed between the Angeles spouses and Mercado. • Accounting of the proceeds is not a proper subject for the present case. which was clear from the fact that they contributed money to a common fund and divided the profits among themselves. the partnership relationship was evident. relying on Arts. of Justice committed grave abuse of discretion in dismissing the appeal -‐ No 2. and that this had existed since 1991. In case of the money received. Cruz. between him and his spouse as industrial partners and the Angeles spouses as financiers. and that such document alone proves Mercado’s misappropriation of their P210. o There is no estafa where money is delivered by a partner to his co-‐partner on the latter’s representation that the amount shall be applied to the business of their partnership. nor does it affect the partnership’s juridical personality • The Angeles spouses admit to facts that prove the existence of a partnership o A contract showing a sosyo industrial or industrial partnership o Contribution of money & industry to a common fund o Division of profits between the Angeles spouses and Mercado 3. 2. W/N there was misappropriation by Mercado – No RATIO/RULING: 1. and they claim that only after this demand for an accounting did thy discover that Mercado had put the contract of antichresis over the subject land under Mercado and his spouse’s names Mercado denied the Angeles spouses’ allegations o Claimed that there exists an industrial partnership. of Justice’s resolution. thus the document which was in the name of Mercado and his spouse fail to convince that there was deceit or false representation that induced the Angeles spouses to part with their money • Even the RTC of Sta. Decision of Sec. o Angeles spouses acknowledged their joint business venture in the barangay conciliation proceedings although they assailed the manner the business was conducted o Although the legal formalities for the formation were not adhered to. of Justice: dismissed the appeal o Angeles spouses failed to show sufficient proof that Mercado deliberately deceived them in the transaction o Mercado satisfactorily explained that the Angeles spouses do not want to be revealed as the financiers o Under the circumstances. DISPOSITION: Petition for certiorari dismissed. but after Mercado filed his counter-‐affidavit and moved for reconsideration. It was their practice to enter into business transactions with other people under the name of Mercado because the Angeles spouses did not want to be identified as the financiers o Attached bank receipts showing deposits in behalf of Emerita Angeles and contracts under his name for the Angeles spouses During the barangay conciliation proceedings. • Failure to register does not affect the liability of the partnership and of the partners to third persons. Oscar Angeles stated that there was a written sosyo industrial agreement: capital would come from the Angeles spouses while the profit would be divided evenly between Mercado and the Angeles spouses Provincial Prosecution Office: first recommended the filing of a criminal information for estafa. issued an amended resolution dismissing the complaint Angeles spouses appealed to Sec. Mercado satisfactorily explained that the Angeles spouses do not want to be revealed as the financiers. Angeles spouses allege that they had no partnership with Mercado. instead of the Angeles spouses. they committed a procedural error when they failed to file a motion for reconsideration of the Sec. Angeles spouses fail to convince that the Secretary of Justice committed grave abuse of discretion when he dismissed their appeal. • • • • • . Moreover. After 3 years. all concur. which is already enough reason to dismiss the case. VOTE: 1st Division. colloquially known as sosyo industrial. 000 Sec. W/N the Sec. which handled the civil case filed by the Angeles spouses against Mercado and Leo Cerayban stated that it was the practice to have the contracts secured in Mercado’s name as the Angeles spouses fear being kidnapped by the NPA or being questioned by the BIR as Oscar Angeles was working with the government. of Justice affirmed. 1771 to 1773 of the Civil Code. before the contract of antichresis over the subject land o Mercado used his and his spouse’s earnings as part of the capital in the business transactions which he entered into in behalf of the Angeles spouses. According to the stipulation facts the plaintiffs organized a partnership of a civil nature because each of them put up money to buy a sweepstakes ticket for the sole purpose of dividing equally the prize which they may win. as such collection the prize. ISSUES: W/N the Siblings were an unregistered partnership which was liable to pay corporate tax? .000. purchased one sweepstakes ticket valued at two pesos (P2). in his capacity as co-‐partner. NATURE: Petition for review on certiorari of the decision of the Court of Tax Appeals (CTA) affirming the decision of the Commissioner of Internal Revenue.499 tax on the lottery winnings. 2833. Petitioners assert that they are not a partnership. FACTS: • The 15plaintiff are all residents of the municipality of Pulilan. Joint Adventures 5. FACTS: Petitioners Mariano Pascual and Renato P. HELD: 1. the said entity is the one bound to pay the income tax which the defendant collected under the aforesaid section 10 (a) of Act No.101. Whether they should pay the tax collectively or whether the latter should be prorated among them and paid individually. as amended by section 2 of Act No. 1939 PASCUAL v. Bulacan. o the said ticket was registered in the name of Jose Gatchalian and Company. the existence of a juridical personality different from the individual partners. CIR (October 18. but are co-‐owners who have paid their corresponding capital gains in ‘73 and ‘74. in the same capacity. • PARTNERSHIP [1st SET] 15 (DIONNE) || D2014 The partnership was not only formed. the office issued the check for P50. Jose Gatchalian personally appeared in the office of the Philippines Charity Sweepstakes. Collectively. Agency GATCHALIAN v. but upon the organization thereof and the winning of the prize. as they did in fact in the amount of P50. joint tenancy 3. 1965 – Bought 2 Parcels of Land 1966 – Bought another 3 Parcels of Land 1968 – Sold the first to Parcels of Land 1970 – Sold the remaining 3 Parcels. or merely a community of property without a personality of its own. Having organized and constituted a partnership of a civil nature.00 profit. 2. Whether the plaintiffs formed a partnership. April 29. 3761. J. ISSUE: 1. J.000. o CIR denied the plaintiff’s request for exemption. Dragon are siblings. divided in various amounts among themselves. Co-‐ownership. Cuentas en Participacion 7. • Plaintiff submitted 15 income tax returns for exemption from the 1. Tenancy in common. 1988) 2. MUTUAL AGENCY E. Joint Ventures 4. and the said partner. D. and paid the corresponding capital gains by availing of the tax amnesty in the years 1973 – 74. • All these circumstances repel the idea that the plaintiffs organized and formed a community of property only.70 for corporate income tax being an unregistered partnership. Formed a partnership of a civil nature. collected the said check. Co-‐possession 2. CIR PONENTE: Imperial. DISTINGUISH FROM 1. o The ticket won 50. BIR Commissioner assessed that the siblings owed P107.000 in favor of Jose Gatchalian and company. They realized a total of P 60. stating that the plaintiffs are a partnership. PONENTE: Gancayo. Joint accounts 6. asking that the tax be divided according to the amount paid by each plaintiff. and the freedom of each party to transfer or assign the whole property. DOCTRINE: There must be a clear intent to form a partnership.000 pesos. 707. That eventuality should be obviated. RATIO/RULING: The CTA anchored their ruling on an earlier case of Evangelista. which showed the character of habitually peculiar to business transactions engaged in for the purpose of gain was present.. and b) intent to divide the profits among the contracting parties. The petitioners were not engaged in any joint venture by reason of that isolated transaction. whether or not the persons sharing them have a joint or common right or interest in any property from which the returns are derived. ISSUES:Whether or not petitioners have indeed formed a partnership or joint venture and thus.584 for each of them. petitioners resold said lots to the Walled City Securities Corporation and Olga Cruz Canda. and use of such property and applications of the proceeds therefrom. the earlier ruling in Evangelista showed that there were several transactions. resold the same and divided the profit among themselves. JJ. PONENTE: Aquino. Took no part OBILLOS v. There must be intent to create a PARTNERSHIP with a distinct juridical personality to that of the partners. and the freedom of each party to transfer or assign the whole property. Which held that the requisite for a partnership is a) an agreement to contribute money. Cruz.792. 1985) DOCTRINE: The sharing of gross returns does not of itself establish a partnership. The assessments are cancelled. To regard the petitioners as having formed a taxable unregistered partnership would result in oppressive taxation and confirm the dictum that the power to tax involves the power to destroy. The petitioners contested the assessments. a 50% fraud surcharge and a 42% accumulated interest. CIR (October 29. they were co-‐owners. In the present case. Grino-‐Aquino. HELD &RATIO/RULING:We hold that it is error to consider the petitioners as having formed a partnership under article 1767 of the Civil Code simply because they allegedly contributed P178. DISPOSITION:WHEREFORE.584 as a " taxable in full (not a mere capital gain of which is taxable) and required them to pay deficiency income taxes aggregating P56. Concur Narvasa. without becoming partners. Commissioner acting on the theory that the four petitioners had formed an unregistered partnership or joint venture. There must be an unmistakable intention to form a partnership or joint venture. FACTS: PARTNERSHIP [1st SET] 16 (DIONNE) || D2014 NATURE: Petition to review the decision of the Court of Tax Appeals For at least one year after their receipt of two parcels of land from their father. HELD: No. DISPOSITION: Petition is GRANTED decision of the CTA is REVERSED and SET ASIDE VOTE: 3rd Division. They were co-‐ owners pure and simple. Hence. for which they earned a profit of P134. property or industry to a common fund and that they intended to divide the profits among themselves. J. J. the judgment of the Tax Court is reversed and set aside. They treated the profit as a capital gain and paid an income tax on one-‐half thereof or of P16. there is no evidence that petitioners entered into an agreement to contribute money.88 or P33. the existence of a juridical personality different from the individual partners. As testified by Jose Obillos. Article 1769(3) of the Civil Code provides that "the sharing of gross returns does not of itself establish a partnership. the Commissioner considered the share of the profits of each petitioner in the sum of P33. Further. Medialdea. property or industry in a common fund. the Commissioner of Internal Revenue. required the four petitioners to pay corporate income tax on the total profit of P134. Also. No costs.20 including the 50% fraud surcharge and the accumulated interest. The sharing of returns does not in itself establish a partnership whether or not the persons sharing therein have a joint or common right or interest in the property. Two Judges of the Tax Court sustained the same. whether or not the persons sharing them have a joint or common right or interest in any property from which the returns are derived".336 in addition to individual income tax on their shares thereof. agree among themselves as to the management. the instant appeal. To consider them as partners would obliterate the distinction between a co-‐ownership and a partnership. There must be an unmistakable intention to form a partnership or joint venture. and they may. liable for corporate income tax. The common ownership of property does not in itself create a partnership between the owners.12 to buy the two lots.708. One day before the expiration of the five-‐year prescriptive period. they had no such intention. Commissioner merely assumed the presence of these elements. There must be a clear intent to form a partnership.341. Judge Roaquin dissented. though they may use it for purpose of making gains. Jr. . RIVERA v. "it is well established that a bank account may be so created that two persons shall be joint owners thereof during their mutual lives. Ana Rivera instituted the present action against the bank. on leave. now deceased. VOTE: 2nd Division. 2. its operation or effect may be violative of the law. which. that they were joint owners and that either of them could withdraw any part or the whole of said account during the lifetime of both. 2. In the absence of clear proof of the contrary. if it be shown in a given case that such agreement is a mere cloak to hide an . The right to make such joint deposits has generally been held not to be done with by statutes abolishing joint tenancy and survivorship generally as they existed at common law. SC thinks it is valid. which recites in effect that the funds in question belonged to Edgar Stephenson and Ana Rivera.43. Furthermore. TC: held that the agreement in question. and the balance. The TC’s conclusion is predicated on the assumption that Stephenson was the exclusive owner of the funds deposited in the bank. Abad Santos. and there was a balance in said account of P701. which power terminated upon the death of the principal. was a mere power of attorney authorizing Ana Rivera to withdraw the deposit. It is an aleatory contract supported by law a lawful consideration — the mutual agreement of the joint depositors permitting either of them to withdraw the whole deposit during their lifetime. No Yes PARTNERSHIP [1st SET] 17 (DIONNE) || D2014 RATIO/RULING: First Issue 1. the SC gives full faith and credit to the certificate of deposit. and in the instant case it also appears that Ana Rivera served her master for about nineteen years without actually receiving her salary from him. The trial court said that the Civil Code "contains no provisions sanctioning such an agreement" SC thinks it is covered by article 1790 of the Civil Code. 2. Alampayconcur. but that. appellant herein PONENTE: Ozaeta. upon the death of either. 3. viewed from its effect during the lives of the parties. 2. Concepcion Jr. NATURE: The question raised in this appeal is the validity of the survivorship agreement made by and between Edgar Stephenson. which Ana Rivera claimed but which the bank refused to pay to her upon advice of its attorneys who gave the opinion that the survivorship agreement was of doubtful validity. 3. if any." But it not infrequently happens that a person deposits money in the bank in the name of another. The fact that subsequently Stephenson transferred the account to the name of himself and/or Ana Rivera and executed with the latter the survivorship agreement in question although there was no relation of kinship between them but only that of master and servant. ISSUES: 1. the SC gives full faith and credit to the certificate of deposit." Although the survivorship agreement is per se not contrary to law. Stephenson opened an account in his name with the defendant Peoples Bank. administratix of the estate of the deceased. which assumption was in turn based on the facts (1) that the account was originally opened in the name of Stephenson alone and (2) that Ana Rivera "served only as housemaid of the deceased. and the survivor take the whole on the death of the other. the agreement was a donation mortis causa with reference to the balance remaining at the death of one of them. the survivorship agreement in question was executed and the said account was transferred to the name of "Edgar Stephenson and/or Ana Rivera. Prima facie. Edgar Stephenson. or that it is a gift mortis causa of the bank account in question from him to her." At the time of Stephenson's death Ana Rivera held the deposit book. and transferring the balance to the survivor upon the death of one of them. belonged to the survivor. that they were joint owners and that either of them could withdraw any part or the whole of said account during the lifetime of both. For instance. intervened and claimed the amount for the estate. if any. WON the survivorship agreement is valid HELD: Second issue: 1. belonged to the survivor. nullifies the assumption that Stephenson was the exclusive owner of the bank account. not having been executed with the formalities of a testamentary disposition as required by the Civil Code. 3. J. and Ana Rivera. 1942) DOCTRINE: In the absence of clear proof of the contrary. was of no legal effect. FACTS: Ana Rivera was employed by Edgar Stephenson as housekeeper. upon the death of either. and the balance. PEOPLE’S BANK (April 7.WON the survivorship agreement was a mere power of attorney from Stephenson to Ana Rivera. Cuevas. Escolin. and Minnie Stephenson.072 in said account. alleging that the money deposited in said account was and is the exclusive property of the deceased. which recites in effect that the funds in question belonged to persons A and B. viewed from its effect after the death of either of the parties. When there was a balance of P2. natural or juridical. So ordered. R. Inc. HELD: • PLAINTIFFS CLAIM THAT because of the pooling of resources.) There is nothing in the record to indicate that the venture in which plaintiff is represented by Gregorio Araneta. 80 A. That the father of the plaintiffs and Lay were partners. no certificate of partnership. What the Rules of Court require is that an action be brought in the name of. (2) they were the ones giving orders to the employees. but not necessarily by. BOLANOS FACTS: This was an action to recover possesion of registered land situated in barrio Tatalon. that is. of Corp. Weston. ISSUE: Was there a partnership between Tan Eng Kee and Tan Eng Lay? No... 1043. entered into a partnership engaged in the business of selling lumber and hardware and construction supplies named "Benguet Lumber" which they jointly managed until Tan Eng Kee's death. the law firm Araneta & Araneta. Tuason and Co. Tan Eng Lay and his children caused the conversion of the partnership "Benguet Lumber" into a corporation called "Benguet Lumber Company. Quezon City. VOTE: All concur TUASON v. inofficious donation. but the CA reversed such decision.) Ø The complaint is signed by the law firm of Araneta and Araneta. Ø There is nothing to the contention that the present action is not brought by the real party in interest. (Section 2. through its undersigned counsel. is obvious from the fact that: (1) they conducted the affairs of the business during Kee's lifetime. vs. There was no partnership whatsoever. Tan Eng Kee and Tan Eng Lay. hence the present petition. no agreement as to profits and . with legal interest thereon from the date of the complaint.. • RTC granted the petitioner for accouting and determined that Tan Eng Kee and Tan Eng Lay had entered into a joint venture. it may be assailed and annulled upon such grounds." The incorporation was purportedly a ruse to deprive Tan Eng Kee and his heirs of their rightful participation in the profits of the business. DISPOSITION: The agreement appealed from is reversed and another judgment will be entered in favor of the plaintiff ordering the defendant bank to pay to her the sum of P701. Inc.". there was no firm account. Rule 2. (4) their families stayed together at the Benguet Lumber compound. and (5) all their children were employed in the business in different capacities. The plaintiff was represented by a corporation. 2000 FACTS: • The common-‐law spouse and children of TAN ENG KEE (the plaintiffs) filed suit against the decedent's brother TAN ENG LAY for accounting. no firm letterheads submitted as evidence.43. jointly. in a suit in court. another corporation. M. Inc. it may nevertheless enter into a joint venture with another where the nature of that venture is in line with the business authorized by its charter (Wyoming-‐Indiana Oil Gas Co. Except for a firm name. or to defeat the legitime of a forced heir. Ø There is nothing against one corporation being represented by another person. HEIRS OF TANG ENG KEE v. the real party in interest. to transfer property in fraud of creditors. o Petitioners claim that in 1981. o After the second World War." It is true that the complaint also states that the plaintiff is "represented herein by its Managing Partner Gregorio Araneta. 1082. and the costs in both instances. as "its managing partner" is not in line with the corporate business of either of them. o HOWEVER: These are not evidences supporting the existence of a partnership. the post-‐war Benguet Lumber was eventually established. No such vice has been imputed and established against the agreement involved in the case. ISSUE: WON the case should be dismissed on the ground that the case was not brought by the real property in interest HELD: No. for the true rule is that though a corporation has no power into a Ø PARTNERSHIP [1st SET] 18 (DIONNE) || D2014 partnership. liquidation and winding up of the alleged partnership formed after World War II between Tan Eng Kee and Tan Eng Lay. L. Ø The contention that Gregorio Araneta Inc. pooling their resources and industry together. citing 2 Fletcher Cyc. "counsel for plaintiff" and commences with the statement "comes now plaintiff. (3) they were the ones preparing orders from the suppliers. cannot act as managing partner for plaintiff on the theory that it is illegal for two corporations to enter into a partnership is without merit. by J. CA October 3. Whatever privileges Tan Eng Lay gave his brother. (2) Co-‐ownership or co-‐possession does not of itself establish a partnership. 1986. the petition must fail. as his share in the profits of Benguet Lumber Company for any particular period. (e) As the consideration for the sale of a goodwill of a business or other property by installments or otherwise. J. shall specifically provide for (1) Cumulative voting for directors: xxx xxx xxx - . the undisputed fact remains that Tan Eng Kee is the brother of Tan Eng Lay. and which were not given the other employees. (c) As an annuity to a widow or representative of a deceased partner. insofar as permitted under Philippine law.. AURBACH v. FACTS: In 1961. (b) As wages of an employee or rent to a landlord. losses. whether or not the persons sharing them have a joint or common right or interest in any property which the returns are derived. lived in the lumber compound and this privilege was not accorded to other employees. SANITARY WARES (December 15. a domestic corporation was incorporated for the primary purpose of manufacturing and marketing sanitary wares. Saniwares. On preparing supply orders: even a messenger or other trusted employee. DISPOSITIVE: There being no partnership. factory or store gives orders and directions to his subordinates. On August 15. It had no business book. Jr. Petitioners failed to show how much their father.R. 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. therefore. which is one of the essential features of a partnership. SP Nos. Hence. NATURE: Consolidated petitions seek the review of the amended decision of the Court of Appeals in CA-‐G. On power to give orders: even a mere supervisor in a company. Baldwin Young went abroad to look for foreign partners. United States entered into an Agreement with Saniwares and some Filipino investors whereby ASI and the Filipino investors agreed to participate in the ownership of an enterprise which would engage primarily in the business of manufacturing in the Philippines and selling here and abroad vitreous china and sanitary wares. There was even no attempt to submit an accounting corresponding to the period after the war until Kee's death in 1984. but no PARTNERSHIP [1st SET] 19 (DIONNE) || D2014 such inference shall be drawn if such profits were received in payment: (a) As a debt by installment or otherwise. a foreign corporation domiciled in Delaware. not a partner. Mr." 3. persons who are not partners as to each other are not partners as to third persons. if any. 1962. European or American who could help in its expansion plans. The parties agreed that the business operations in the Philippines shall be carried on by an incorporated enterprise and that the name of the corporation shall initially be "Sanitary Wares Manufacturing Corporation. over whom confidence is reposed by the owner. of the then Intermediate Appellate Court PONENTE: Gutierrez. ASI. only proves the kindness and generosity of Tan Eng Lay towards a blood relative. that an employee's position is higher in rank. and no time fixed for the duration of the partnership. so to speak. • In determining whether a partnership exists. On staying in the premises of Benguet Lumber: although Tan Eng Kee. 1989) DOCTRINE: The rule is that whether the parties to a particular contract have thereby established among themselves a joint venture or some other relation depends upon their actual intention which is determined in accordance with the rules governing the interpretation and construction of contracts. 05604 and 05617 which set aside the earlier decision dated June 5. together with his family. these rules shall apply: (1) Except as provided by Article 1825. no written account nor any memorandum for that matter and no license mentioning the existence of a partnership. though the amount of payment vary with the profits of the business. thus. whether such co-‐owners or co-‐possessors do or do not share any profits made by the use of the property. not an indication that Tan Eng Kee was a partner. it is not unusual that he orders around those lower in rank. it follows that there is no dissolution. (4) The receipt by a person of a share of the profits of a business is a prima facie evidence that he is a partner in the business. (d) As interest on a loan. It is. even a partner does not necessarily have to perform this particular task. On profits earned: Tan Eng Kee was only an employee. Furthermore. (3) The sharing of gross returns does not of itself establish a partnership. Naturally. Tan Eng Kee. Articles of Incorporation (a) The Articles of Incorporation of the Corporation shall be substantially in the form annexed hereto as Exhibit A and. Even if the payrolls as evidence were discarded. received. can order materials from suppliers for and in behalf of Benguet Lumber. Hence. close personal relations existed between them. petitioners would still be back to square one. winding up or liquidation to speak of. One of the incorporators. So long. they failed to prove that Tan Eng Kee and Tan Eng Lay intended to divide the profits of the business between themselves. Wolfgang Aurbach. Ceniza then nominated Mr. George F. including the grant of veto powers over a number of corporate acts and the right to designate certain officers. The SEC decision led to the filing of two separate appeals with the Intermediate Appellate Court by Wolfgang Aurbach. There were protests against the action of the Chairman and heated arguments ensued. WHILE RECOGNIZING THAT THE STOCKHOLDERS OF SANIWARES ARE DIVIDED INTO TWO BLOCKS. a basic disagreement was due to their desire to expand the export operations of the company to which ASI objected as it apparently had other subsidiaries of joint joint venture groups in the countries where Philippine exports were contemplated. Rollo-‐ 75975-‐76) On the other hand. 75951 contend that: THE AMENDED DECISION OF THE RESPONDENT COURT. Wolfgang Aurbach. John Griffin. David Whittingham and Charles Chamsay. 1983. Luciano E. John Griffin and David P. which shall consist of nine individuals. and the other six shall be designated by the other stockholders of the Corporation. 05617). with the explanation that there was a tie - PARTNERSHIP [1st SET] 20 (DIONNE) || D2014 among the other six (6) nominees for the four (4) remaining positions of directors and that the body decided not to break the tie. The continued meeting was presided by Luciano E. On the basis of the cumulative votes cast earlier in the meeting. Jr. John Griffin. Raul A. Charles Chamsay. THE COURT OF APPEALS PROHIBITS THE STOCKHOLDERS FROM EXERCISING THEIR FULL VOTING RIGHTS REPRESENTED BY THE NUMBER OF SHARES IN SANIWARES. 14-‐15. while Andres Gatmaitan acted as Secretary. The agreement contained provisions designed to protect it as a minority group. SP No. Whittingham. The Philippine investors nominated six. That Amended Decision would sanction the CA's disregard of binding contractual agreements entered into by stockholders and the replacement of the conditions of such agreements with terms never contemplated by the stockholders but merely dictated by the CA . allegedly representing 53 or 54% of the shares of Saniwares. As long as American-‐ Standard shall own at least 30% of the outstanding stock of the Corporation. Upon a motion for reconsideration filed by the appellees (Lagdameo Group) the appellate court (Court of Appeals) rendered the questioned amended decision. Petitioners Wolfgang Aurbach. and the legal advice of Saniwares' legal counsel.R. The chairman. II. (pp.. John Griffin. Sr. David Whittingham and Charles Chamsay (docketed as AC-‐G.2. decided to continue the meeting at the elevator lobby of the American Standard Building. A series of events then ensued that culminated in the eventual adjournment of the meeting and where the ASI Group. Salazar. the petitioners in G.R. and Baldwin Young.R. Management (a) The management of the Corporation shall be vested in a Board of Directors. UPHELD THE ALLEGED ELECTION OF PRIVATE RESPONDENTS AS MEMBERS OF THE BOARD OF DIRECTORS OF SANIWARES WHEN IN FACT THERE WAS NO ELECTION AT ALL. Unfortunately. THE COURT OF APPEALS. IN EFFECT. No. namely. 75975-‐76 assails the amended decision on the following grounds: 11. The ASI group nominated three persons namely. Mr. Salazar (docketed as AC-‐G. Eduardo R. Ernesto R. Baldwin Young ruled the last two nominations out of order on the basis of section 5 (a) of the Agreement. Luciano E. Salazar voted for himself. These incidents triggered off the filing of separate petitions by the parties with the Securities and Exchange Commission (SEC). No. 11.1. Andres Gatmaitan. Lagdameo. Boncan. On March 8. Nos. The Amended decision would likewise sanction the deprivation of the property rights of stockholders without due process of law in order that a favored group of stockholders may be illegally benefitted and guaranteed a continuing monopoly of the control of a corporation. such as a member of the Executive Committee whose vote was required for important corporate transactions. Petitioner Luciano E. with the business successes. thus the said five directors were certified as elected directors by the Acting Secretary. Salazar and other stockholders. 05604) and by Luciano E. FAILS TO FULLY ENFORCE THE BASIC INTENT OF THE AGREEMENT AND THE LAW. Luciano E. SP No.. David P. there came a deterioration of the initially harmonious relations between the two groups. THUS DEPRIVING PETITIONERS AND THE CORPORATION THEY REPRESENT OF THEIR PROPERTY RIGHTS WITHOUT DUE PROCESS OF LAW.R. Lee. - - - - - - - - - . the annual stockholders' meeting was held. The ASI Group and Salazar appealed the decision to the SEC en banc which affirmed the hearing officer's decision. The petitions were consolidated and the appellate court in its decision ordered the remand of the case to the Securities and Exchange Commission with the directive that a new stockholders' meeting of Saniwares be ordered convoked as soon as possible. the consistent practice of the parties during the past annual stockholders' meetings to nominate only nine persons as nominees for the nine-‐member board of directors. According to the Filipino group. Salazar in G. The joint enterprise thus entered into by the Filipino investors and the American corporation prospered. under the supervision of the Commission. 75875 assign the following errors: I.R. The two petitions were consolidated and tried jointly by a hearing officer who rendered a decision upholding the election of the Lagdameo Group and dismissing the quo warranto petition of Salazar and Chamsay. who in turn nominated Mr. Whittingham and Charles Chamsay in G. An appeal was made by the ASI representative to the body of stockholders present that a vote be taken on the ruling of the Chairman. 5. Ernesto Lagdameo. Salazar. the ASI Group nominated its four nominees. three of the nine directors shall be designated by American-‐ Standard. HELD: In the instant cases. he negotiated the Agreement with ASI in behalf of the Philippine nationals. we believe that under the Agreement there are two groups of stockholders who established a corporation with provisions for a special contractual relationship between the parties. The Agreement further provides that the sales policy of Saniwares shall be that which is normally followed by ASI and that Saniwares should not export "Standard" products otherwise than through ASI's Export Marketing Services. In the instant cases. the provision that ASI shall designate 3 out of the 9 directors and the other stockholders shall designate the other 6.1962 wherein it is clearly stated that the parties' intention was to form a corporation and not a joint venture. Moreover. Rule 130 of the Revised Rules of Court. RATIO/RULING: There are two groups in this case. ASI agreed to provide technology and know-‐how to Saniwares and the latter paid royalties for the same. and that 2) ASI is given certain protections as the minority stockholder. 24. The ASI Group and petitioner Salazar (G. the super-‐majority voting requirements for amendments of the articles and by-‐laws.e. The Agreement also requires a 75% super-‐majority vote for the amendment of the articles and by-‐laws of Saniwares. our examination of important provisions of the Agreement as well as the testimonial evidence presented by the Lagdameo and Young Group shows that the parties agreed to establish a joint venture and not a corporation. namely ASI. in effect gave ASI (which designates 3 directors under the Agreement) an effective veto power. 1962 wherein it stated the parties’ intention was to form a corporation and not a joint venture. To answer this question the following factors should be determined: (1) the nature of the business established by the parties whether it was a joint venture or a corporation and (2) whether or not the ASI Group may vote their additional 10% equity during elections of Saniwares' board of directors. Premises considered. 1983. They specifically mention number 16 under Miscellaneous Provisions which states: xxx xxx xxx c) nothing herein contained shall be construed to constitute any of the parties hereto partners or joint venturers in respect of any transaction hereunder. Rollo-‐75951) - PARTNERSHIP [1st SET] 21 (DIONNE) || D2014 body are all consistent with a joint venture and not with an ordinary corporation. which owns 40% of the capital stock and the Philippine National stockholders who own the balance of 60%. Each group is assured of a fixed number of directors in the board. An examination of the Agreement shows that certain provisions were included to protect the interests of ASI as the minority. (P. The history of the organization of Saniwares and the unusual arrangements which govern its policy making - - - - - - - - - - .R. on the condition that the Agreement should contain provisions to protect ASI as the minority. our examination of important provisions of the Agreement as well as the testimonial evidence presented by the Lagdameo and Young Group shows that the parties agreed to establish a joint venture and not a corporation. Furthermore. He testified that ASI agreed to accept the role of minority vis-‐a-‐vis the Philippine National group of investors. 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. Under the Agreement. 75975-‐76) contend that the actual intention of the parties should be viewed strictly on the "Agreement" dated August 15.. (At P. As stated by the SEC: According to the unrebutted testimony of Mr. The ASI Group and petitioner Salazar contend that the actual intention of the parties should be viewed strictly on the “Agreement” dated August 15. and most significantly to the issues of tms case. Nos. THE AMENDED DECISION DOES NOT CATEGORICALLY RULE THAT PRIVATE PETITIONERS HEREIN WERE THE DULY ELECTED DIRECTORS DURING THE 8 MARCH 1983 ANNUAL STOCKHOLDERS MEETING OF SANTWARES. 4-‐5) Section 5 (a) of the agreement uses the word "designated" and not "nominated" or "elected" in the selection of the nine directors on a six to three ratio. Filipino entrepreneurs in their desire to develop the industrial and manufacturing capacities of a local firm are constrained ISSUES: The main issue hinges on who were the duly elected directors of Saniwares for the year 1983 during its annual stockholders' meeting held on March 8. For example. (pp. 66. Quite often. ASI in its communications referred to the enterprise as joint venture. ASI is contractually entitled to designate a member of the Executive Committee and the vote of this member is required for certain transactions. Baldwin Young. It is pertinent to note that the provisions of the Agreement requiring a 7 out of 9 votes of the board of directors for certain actions. composed of foreign investors. Rollo-‐GR No. the grant to ASI of the right to designate certain officers of the corporation. ASI and the other stockholders. the vote of 7 out of 9 directors is required in certain enumerated corporate acts. clearly indicate that there are two distinct groups in Saniwares. i. the Lagdameo group composed of Filipino investors and the American Standard Inc. 75875) They object to the admission of other evidence which tends to show that the parties' agreement was to establish a joint venture presented by the Lagdameo and Young Group on the ground that it contravenes the parol evidence rule under section 7. ASI is also given the right to designate the president and plant manager. or as they may agree. Thirdly paragraph 2 of Sec. such contractual provision. However. the undeniable fact is that it is a close-‐held corporation. its stockholders should not be precluded from entering into contracts like voting agreements if these are otherwise valid. as correctly held by the SEC. (3) give to the shareholders control over the selection and retention of employees. even assuming that sec. voting or pooling agreements are perhaps more useful and more often resorted to in close corporations. As Campos and Lopez-‐Campos explain: Paragraph 2 refers to pooling and voting agreements in particular. For example. As the Philippine firm enlarges its operations and becomes profitable. ASI. is valid and binding upon the signatories thereto. the Dy family for 7 stockholders. Firstly. PARTNERSHIP [1st SET] 22 (DIONNE) || D2014 Secondly. there is always a danger from such arrangements. Of course. - - - - DISPOSITION: WHEREFORE. (Please refer to discussion in pp. But they may also be found necessary even in widely held corporations. use of its brand names. 5(a) of the Agreement relating to the designation or nomination of directors restricts the right of the Agreement's signatories to vote for directors. 75875 are DISMISSED and the petition in G. these 95 stockholders are not separate from each other but are divisible into groups representing a single Identifiable interest. may provide that in exercising any voting rights. Lagdameo. intend to establish its own sole or monopolistic operations and merely uses the joint venture arrangement to gain a foothold or test the Philippine waters.R. In short. As correctly held by the SEC Hearing Officer: It is said that participants in a joint venture. and (4) set up a procedure for the settlement of disputes by arbitration. The YoungYutivo family count for another 13 stockholders. the shares held by them shall be voted as therein provided. even assuming that Saniwares is technically not a close corporation because it has more than 20 stockholders.-‐ xxx xxx xxx 2. which include appellants.R. Arrangements are formalized where a foreign group becomes a minority owner of a firm in exchange for its manufacturing expertise. No. 75975-‐76 and G. the Philippine Corporation Code itself recognizes the right of stockholders to enter into agreements regarding the exercise of their voting rights. 100.R. The foreign group may. Baldwin Young. so to speak. its nominees and lawyers count for 13 of the 95 stockholders. The amended decision of the Court of Appeals is MODIFIED in that Messrs. practically only 17 stockholders of Saniwares. Wolfgang Aurbach John Griffin. the Chamsay family for 8 stockholders. it is entirely possible that a corporation which is in fact a close corporation will not come within the definition. Appellants contend that the above provision is included in the Corporation Code's chapter on close corporations and Saniwares cannot be a close corporation because it has 95 stockholders. (2) give certain shareholders or groups of shareholders power to select a specified number of directors. Sec. 5 to 6 of appellees' Rejoinder Memorandum dated 11 December 1984 and Annex "A" thereof). although Saniwares had 95 stockholders at the time of the disputed stockholders meeting. If the members of one family and/or business or interest group are considered as one (which. Surely. and other such assistance. Agreements by stockholders. appellants cannot honestly claim that Saniwares is a public issue or a widely held corporation. etc. since the Code limits the legal meaning of close corporations to those which comply with the requisites laid down by section 96. or fraud on the other stockholders not parties to the agreement. It is submitted that there is no reason for denying stockholders of corporations other than close ones the right to enter into not voting or pooling agreements to protect their interests. To the extent that such subversive actions can be lawfully prevented. from the start. Lee are declared as the duly elected directors of Saniwares at the March 8. Moreover. A noted authority has pointed out that just as in close corporations.. the petitions in G. Ernesto R. Boncan. the Santos family for 9 stockholders. to seek the technology and marketing assistance of huge multinational corporations of the developed world. In all other . 100 of the Corporation Code does not necessarily imply that agreements regarding the exercise of voting rights are allowed only in close corporations. shareholders' agreements in joint venture corporations often contain provisions which do one or more of the following: (1) require greater than majority vote for shareholder and director action. Or the covetousness may come later. they should be for purposes of determining how closely held Saniwares is there were as of 8 March 1983. Jr. it is respectfully submitted. or as determined in accordance with a procedure agreed upon by them. Nos. Lagdameo. An agreement between two or more stockholders. in organizing the joint venture deviate from the traditional pattern of corporation management. Enrique Lagdameo. No. the foreign group undermines the local majority ownership and actively tries to completely or predominantly take over the entire company. Raul A.1983 annual stockholders' meeting. David Whittingham Emesto V. the courts should extend protection especially in industries where constitutional and legal requirements reserve controlling ownership to Filipino citizens. The Lagdameo Group stated in their appellees' brief in the Court of Appeal: In fact. This undermining of joint ventures is not consistent with fair dealing to say the least. In such case. if in writing and signed by the parties thereto. 75951 is partly GRANTED. as long as they do not intend to commit any wrong. and George F. Here Aurelio files for an action of Specific Performance against his partners. Essentially just read the doctrine and the underlined portions sa ratio. and promising him a 10% share or 1 million pesos. to render an accounting and give him his share of the profits. FACTS: Aurelio (Petitioner) and Eduardo Litonjua are brothers. ISSUES: W/N there is a Valid Partnership? HELD: No. and 1773 of the Civil Code. Carpio-‐Morales concur BOURNS v. BOURNS. If it involves immoveable property. VOTE: 3rd Division. (else VOID) It involves capital P 3. concur. Yung doctrine lang naman ang importante. No. it would be void as in violation of the statute of frauds. the rest of the discussions show the HOW and WHY of the doctrine na joint venture nga yung intent. LITONJUA v. M. Court ruled even as a innominate contract. there can be no quibbling that 1) The memorandum does not meet the public instrumentation requirements exacted under Article 1771 of the Civil Code.00 in money or property.J. Costs against the petitioners in G. but is unsigned and undated. DOCTRINE: A partnership. the existence of which was only known to those who had an interest in the same. The memorandum. CARMAN (December 4. being no mutual agreements between the partners and without a corporate name indicating to the public in some way that there were other people besides the one who ostensibly managed and conducted the business.. SO ORDERED.R. inventory of such is needed signed by the partners. if any. JJ. 2005) DOCTRINE: A Partnership must be in a public document if: 1) 2) Immoveable Property and Real Rights contributed to it. respects. (Being it’s performance was to be done 1 year after perfection of the contract. 3) And inasmuch as the inventory requirement under the succeeding Article 1773 goes into the matter of validity when immovable property is contributed to the partnership. for being contrary to Articles 1771. . LITONJUA (Dec 13.. • Those who contract with the person under whose name the business of such partnership of cuentas en participacion is conducted.000. Plaintiff-‐Appellee .R. Corona. Fernan. a. to the supposed partnership. ET AL. the next logical point of inquiry turns on the nature of petitioner’s contribution. A third person Yang was also alleged to be a member in the joint venture and partnership. 75975-‐76 and G. Feliciano. 75875. shall have only a NATURE: Petition for review on certiorari PONENTE: Garcia. 1772. assuming arguendo. D. As an unsigned document. on its face. J. and that they would work together in maintaining the family business. Aurelio alleges that he had a partnership with his brother Eduardo evidenced by a private memorandum (unsigned) executed by Eduardo which said he was giving 10% of the equity or 1 million pesos. then goes on to allege that. is exactly the accidental partnership of cuentas en participacion defined in article 239 of the Code of Commerce. Nos. personal in tone.) DISPOSITION: Petition is DENIED ruling of the CA AFFIRMED VOTE: 1st Division. Defendants-‐ Appellants.. in which Eduardo expressed his desire to train his brother. Bidin and Cortes. CONCURRING/DISSENTING OPINION: None. contains typewritten entries. let alone registered with the Securities and Exchange Commission (SEC). the questioned decision is AFFIRMED. The Memorandum cannot be presented for notarization. took no part. that the contract was not one of partnership that the same actually established an innominate contract and was a source of actionable rights. Petitioner. (Chairman). the contract was void or at most unenforceable. Sandoval-‐Gutierrez. Panganiban. vs.. being unsigned and doubtless referring to a partnership involving more than P3. 2) Moreover.000 (must be filed in the SEC) PARTNERSHIP [1st SET] 23 (DIONNE) || D2014 The supposed contract is void. ADDITIONAL NOTES: Sorry mahaba at magulo. RATIO/RULING: The supposed contract of partnership was evidenced by a private memorandum (unsigned). as called for under the Article 1772 of the Code. C. J. CARMAN. 1906) FRANK S. RATIO/RULING: • It seems that the alleged partnership between Lo-‐Chim-‐Lim and the appellants was formed by verbal agreement only. • The evidence of record shows. NATURE: Appeal from a judgment of the CFI PONENTE: MAPA. Vicente Palanca and Go-‐Tauco only excepted to the said judgment. as Lo-‐Chim-‐Lim was the only one who contracted with him. and there is no evidence that the partnership over contracted in any other form. coparticipants with the said Lo-‐ Chim-‐Lim in the business in question. however. having ordered the plaintiff to do some work for him at his sawmill in the city of Manila. M. • Under such circumstances we find nothing upon which to consider this partnership other than as a partnership of cuentas en participacion. which according to the evidence was the name of one of the defendants. • On the other hand. shall have no right of action against the third person who contracted with the manager unless such manager formally transfers his right to them. Go-‐Tuaco had a lumber yard in Calle Lemmery of the city of Manila in the year 1904. alleging that. although he gave to the appellants a share was has been shown with certainty. Vicente Palanca. o that the other defendants were the partners of Lo-‐Chim-‐Lim in the said lumber-‐yard business. and if there were any. J. but a simple business conducted by Lo-‐Chim-‐Lim exclusively. ISSUES: What is the real legal nature of the participation which the appellants had in Lo-‐Chim-‐Lim's lumber yard and consequently their liability toward the plaintiff? HELD: The partnership is a partnership of cuentas en participacion. It may be that. • The plaintiff. "That Lo-‐Chim-‐Lim had a certain lumber yard in Calle Lemery of the city of Manila. in his own name. o The contracts made with the plaintiff were made by Lo-‐Chim-‐Lim individually in his own name. C. is exactly the accidental partnership of cuentas en participacion defined in article 239 of the Code of Commerce. Carson. that partnership had no corporate name. and the latter. right of action against such person and not against the other persons interested. it is something different. it does not appear that there was any mutual agreement. on the other hand. or that it was ever recorded in a public instrument.. and the latter." In other words.: FACTS: • The plaintiff in this action seeks to recover the sum of $437. At least there is no evidence tending to show that the said agreement was reduced to writing. • CFI: "Lo-‐Chim-‐Lim. has brought this action against Lo-‐Chim-‐Lim and his codefendants jointly. DISPOSITION: The judgment appealed from this hereby reversed and the appellants are absolved of the complaint without express provisions as to the costs of both instances. As far as the evidence shows it seems that the business was conducted by Lo-‐Chim-‐Lim in his own name. and that Vicente Palanca was his partner. and that he was the manager of the same.J. being no mutual agreements between the partners and without a corporate name indicating to the public in some way that there were other people besides the one who ostensibly managed and conducted the business. they were the joint proprietors and operators of the said lumber yard engaged in the purchase and sale of lumber under the name and style of Lo-‐Chim-‐Lim. • A partnership constituted in such a manner. shall have no right of action against the third person who contracted with the manager unless such manager formally transfers his right to them." and that Go-‐Tuaco received part of the earnings of the lumber yard in the management of which he was interested. • The contract relating to the said work was entered into by the said Lo-‐ Chim-‐Lim. (Art 242 of the code Of Commerce. it has not been shown what the agreement was. therefore that the plaintiff has no right to demand from the appellants the payment of the amount claimed in the complaint. Willard and Tracey. o at the time the contract was made. JJ. and have brought the case to this court by bill of exceptions. • Moreover. and had an interest in the said business as well as in the profits and losses thereof . therefore that the plaintiff has no right to demand from the appellants the payment of the amount claimed in the complaint. on the other hand. (Art 242 of the code Of Commerce.. and it appears that the said Lo-‐Chim-‐Lim personally agreed to pay for the work himself. as Lo-‐Chim-‐Lim was the only one who contracted with him. Arellano. • The court below dismissed the action as to the defendants D.50. according to the judgment of the court. Carman and Fulgencio Tan-‐Tongco on the ground that they were not the partners of Lo-‐Chim-‐Lim. CA .. VOTE: EN BANC. balance due on a contract for the sawing of lumber for the lumber yard of Lo-‐Chim-‐Lim. . .) It follows. as a matter of fact. acting as in his own name with the plaintiff. Johnson. the existence of which was only known to those who had an interest in the same.) It follows. Torres. The plaintiff himself alleges in his complaint that the partnership was engaged in business under the name and style of Lo-‐Chim-‐Lim only. between the parties. • PARTNERSHIP [1st SET] 24 (DIONNE) || D2014 Those who contract with the person under whose name the business of such partnership of cuentas en participacion is conducted. shall have only a right of action against such person and not against the other persons interested. moved for a new trial. and participated in the profits and losses of business and that Lo-‐Chim-‐Lim was managing partner of the said lumber yard. the names of other persons interested in the profits and losses of the business nowhere appearing. concur SEVILLA v. but concede that "whatever might have been the true relationship between Sevilla and Tourist World Service. . 3. Inc. the Philippine Travel Bureau.. he padlocked the premises on June 4. the reinstated counterclaim of Segundina Noguera and the new complaint of appellant Lina Sevilla were jointly heard following which the court a quo ordered both cases dismiss for lack of merit PARTNERSHIP [1st SET] 25 (DIONNE) || D2014 ISSUES: WON there was a partnership between Tourist World Service and Lina Sevilla HELD: NO RATIO/RULING: 1. the courts would have been without jurisdiction to try the case. Manila for the former’s use as a branch office. since in any case. Inc. 4. When neither the appellant Lina Sevilla nor any of her employees could enter the locked premises. authorizing the corporate secretary to receive the properties of the Tourist World Service then located at the said branch office. Inc. NATURE: Appeal by certiorari PONENTE: Sarmiento. leased the premises belonging to Noguera at Mabini St. and. 2. appears to have been informed that Lina Sevilla was connected with a rival firm. (April 16. including a partnership. The appellee Segundina Noguera sought reconsideration of the order dismissing her counterclaim which the court a quo. the crucial issue. the trial court ordered the dismissal of the case without prejudice.. Lina Sevilla. Ermita Branch. the same was run by the herein appellant Lina Sevilla. and the second. that the relation between the parties was in the character of employer and employee. The respondent Court of see fit to rule on the question. Inc. The Court finds the resolution of the issue material. FACTS: 1. Tourist World Service. but certainly not employment. 1988) DOCTRINE: A joint venture. that does not make her an employee of Tourist World. that Lina SEVILLA was a mere employee. the Tourist World Service considered closing down its office. the Tourist World Service. an arrangement that would be like claims of a master-‐servant relationship. Inc. For apparent lack of interest of the parties therein. the corporate secretary Gabino Canilao went over to the branch office. 5. since the branch office was anyhow losing. Inc. The Court is asked to declare the true nature of the relation between Lina Sevilla and Tourist World Service. a. b. Inc." the Rule of Law enjoined Tourist World Service and Canilao from taking the law into their own hands. Inc. 4. 1962 to protect the interests of the Tourist World Service. the Bureau Of Labor Relations. 1963. Inc. The Tourist World Service. finding the premises locked. True the respondent Court would later minimize her participation in the lease as one of mere guaranty. on the other hand. a complaint was filed by the herein appellants against the appellees with a prayer for the issuance of mandatory preliminary injunction. and. The records will show that the petitioner.. unilaterally and without the consent of the appellant disconnected the telephone lines of the Ermita branch office of the appellee Tourist World Service. labor disputes being the exclusive domain of the Court of Industrial Relations. presupposes generally a of standing between the joint co-‐venturers or partners. 5. the parties must be bound by some other relation. When the branch office was opened. without the knowledge and consent of the appellant Lina Sevilla entitled the latter to the relief of damages prayed for and whether or not the evidence for the said appellant supports the contention that the appellee Tourist World Service. under the contract of lease covering the Tourist Worlds Ermita office. Tourist World Service. Appellant Lina Sevilla refiled her case against the herein appellees and after the issues were joined. This was firmed up by two resolutions of the board of directors of Tourist World Service. In the first place.. that relation between the between parties was one of joint venture. Segundina Noguera and the Tourist World Service. The petitioners contend. Both appellees answered with counterclaims. Eliseo Canilao. assume any liability thereof. she had bound herself in solidum as and for rental payments. the first abolishing the office of the manager and vice-‐president of the Tourist World Service. being "branch manager" of its Ermita "branch" office and that inferentially. being unable to contact Lina Sevilla. Inc. In the second place. in an order dated June 8. 3. On the strength of a contract entered into by and between Mrs.. however. in reference to the padlocking now questioned. the same was run by the herein 2. and. later. In that event.. represented by Mr. '[w]hen the branch office was opened. 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. Inc. J. or otherwise. Inc. insists. maintains. for if. and as found by the Appellate Court. in its opinion being "whether or not the padlocking of the premises by the Tourist World Service. granted permitting her to present evidence in support of her counterclaim. either as to the result of the enterprise or as to the means used in connection therewith. pursuant to statutes then in force. was not subject to control by the private respondent Tourist World Service. To comply with the mandate of the Tourist World Service. a true employee cannot be made to part with his own money in pursuance of his employer's business. Segundina Noguera. she had no say on the lease executed with the private respondent. as the private respondent. In the case at bar. as and for nominal and/or temperate damages. It is the Court's considered opinion. 1975. We are convinced. we are not. but she did so for and on behalf of her principal. the sum of 25. including a partnership. the agency that we hereby declare to be compatible with the intent of the parties. that the parties had embarked on a joint venture or otherwise. Ø The compensation of the MANAGER shall be fifty per cent (50%) of the net profit of the project before income tax. The agreement was evidenced by a “Power of Attorney”. she had acquired an interest in the business entrusted to her. And as we said. obviously. In her letter of November 28.00 as and for moral damages. 1975 as well as the Resolution issued on July 31. are ORDERED jointly and severally to indemnify the petitioner. and as such.00. As compensation. pre-‐assumed her principal's authority as owner of the business undertaking. she had PARTNERSHIP [1st SET] 26 (DIONNE) || D2014 assumed a personal obligation for the operation thereof. who earns a fixed salary usually. A joint venture. the revocation complained of should entitle the petitioner. Lina Sevilla. the Decision promulgated on January 23. she expressly 'concedes your [Tourist World Service. Her interest. 8. Inc. petitioner's contribution would consist of its expertise in the management and operation of mines. and Eliseo Canilao. FACTS: Petitioner Philex Mining Corp. in addition to its actual mining claim. VOTE: All concur PHILEX v. Inc. DISPOSITION: WHEREFORE. Tourist World Service. It is an agency that. 7. presupposes generally a of standing between the joint co-‐ venturers or partners..'s] right to stop the operation of your branch office in effect.00. The mining suffered serious loses which ended business of both parties evidenced by their execution of a “compromise agreement.000. 6. that is. Inc. The fact that Sevilla had been designated 'branch manager" does not make her Tourist World's employee. It appears that Lina Sevilla is a bona fide travel agent herself. 9. It stressed that Philex entered into a partnership with Baguio Gold. Inc. Accordingly. Inc. It is the essence of this contract that the agent renders services "in representation or on behalf of another. Inc. obviously relied on her own gifts and capabilities. Inc. and of the manager's account which is comprised of P11M in funds. As we said. she received 4% of the proceeds in the concept of commissions. employment is determined by the right-‐of-‐control test and certain economic parameters. in lieu of a distinct partnership name.'s arguments however. Moreover. And apparently. . The private respondent. Inc. when the petitioner. that Baguio Gold would contribute P11M under its owner's account plus any of its income that is left in the project. it cannot be said that Sevilla was under the control of Tourist World Service. as we said. considering the circumstances and from the respondent Court's recital of facts. by any airline for any fare brought in on the effort of Mrs. the remaining 3% going to Tourist World.'s Ermita office. Lina Sevilla. and the sum of P5.'s control over the manner in which the business was run. Ø It was indicated in the said document. the sum of P10. using her own name." Sevilla in pursuing the business. Lina Sevilla. Sevilla solicited airline fares. MINING CORP. In rejecting Tourist World Service. cannot be revoked at will.00. 11. Tourist World Service. She continued the business. rather than a joint managament or a partnership. to damages. appellant Lina O. accepting Tourist World Service. 1961. as a consequence.” The CIR assessed Philex Mining for tax deficiencies. But unlike simple grants of a power of attorney. she retained 4% in commissions from airline bookings. a partnership. cannot be revoked at the pleasure of the principal. entered into an agreement with Baguio Gold. she earned compensation in fluctuating amounts depending on her booking successes. Sevilla payable to Tourist World Service. It is further admitted that Sevilla was not in the company's payroll. Lina Sevilla. Tourist World Service. as and for exemplary damages. that the ties had contemplated a principal agent relationship. Sevilla herself did not recognize the existence of such a relation. The reason is that it is one coupled with an interest. the parties did not hold themselves out as partners. by the respondent Court of Appeals is hereby REVERSED and SET ASIDE. Ø Meanwhile.000. Unlike an employee then. accepting Lina Sevilla's own. the agency having been created for mutual interest. agreed to (wo)man the private respondent. 1961. "as to the means used. is not to the commissions she earned as a result of her business transactions. Under these circumstances. and the building itself was embellished with the electric sign "Tourist World Service. Furthermore. but one that extends to the very subject matter of the power of management delegated to her. where the former agreed to manage the mining operations of the latter. 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. she must have done so pursuant to a contract of agency. For her efforts. of the agent and the principal. Sevilla herself based on her letter of November 28. after Tourist World had stopped further operations. 10. Inc. holding herself solidarily liable for the payment of rentals. ISSUE: WON the parties entered into a contract of agency coupled with an interest which is not revocable at will HELD: No. PROFESSIONAL I. UNIVERSAL B. it has been o PARTNERSHIP [1st SET] 27 (DIONNE) || D2014 held that it may enter into a joint venture which is akin to a particular partnership: under Philippine law. Article 1769 (4) of the Civil Code explicitly provides that the “receipt by a person of a share in the profits of a business is prima facie evidence that he is a partner in the business. like the petitioner. In this case. it is the agency that cannot be revoked or withdrawn by the principal due to an interest of a third party that depends upon it. • In an agency coupled with interest. BY ESTOPPEL APPARENT ORTEGA v. Thus. is the agent’s ability to represent his principal and bring about business relations between the latter and third persons. KINDS OF PARTNERSHIP A. CAPITALIST C. FOR A TERM OR UNDERTAKING G. Although the said provision states that “this Agency shall be irrevocable while any obligation of the PRINCIPAL in favor of the MANAGERS is outstanding. or the mutual interest of both principal and agent. AT WILL F.” it does not necessarily follow that the parties entered into an agency contract coupled with an interest that cannot be withdrawn by Baguio Gold. The entirety of the parties’ contractual stipulations simply leads to no other conclusion than that petitioner’s “compensation” is actually its share in the income of the joint venture. Nino Mine is the fact that it would receive 50% of the net profits as “compensation” under paragraph 12 of the agreement. INDUSTRIAL B. LIMITED E.” • While a corporation. GENERAL D. • Neither can paragraph 16 of the agreement be taken as an indication that the relationship of the parties was one of agency and not a partnership. COMMERCIAL H. even one that is coupled with interest. cannot generally enter into a contract of partnership unless authorized by law or its charter. the non-‐revocation or non-‐withdrawal under paragraph 5(c) applies to the advances made by petitioner who is supposedly the agent and not the principal under the contract. KINDS OF PARTNER A. • The strongest indication that petitioner was a partner in the Sto. An examination of the “Power of Attorney” reveals that a partnership or joint venture was indeed intended by the parties. CA (err walang nakaassign ditto?) III. BY ESTOPPEL . PARTICULAR C. The essence of an agency. Petitioner denied the allegations of the CIR and maintained that its advances of money and property to Baguio Gold were in a nature of a loan as evidenced by the “compromise agreement”. in which the former was to manage and operate the latter’s mine through the parties’ mutual contribution of material resources and industry. it cannot be inferred from the stipulation that the parties’ relation under the agreement is one of agency coupled with an interest and not a partnership. • The main object of the “Power of Attorney” was not to confer a power in favor of petitioner to contract with third persons on behalf of Baguio Gold but to create a business relationship between petitioner and Baguio Gold. a joint venture is a form of partnership and should be governed by the law of partnerships II. inclusive of the MANAGERS’ account. MANAGING D.