(2) SC did not agree with NLRC. Under Article 1840 above,
creditors of the old Jade Mountain are also creditors of the new
Jade Mountain which continued the business of the old one
without liquidation of the partnership affairs. Indeed, a creditor
of the old Jade Mountain, like petitioner Benjamin Yu in respect
of his claim for unpaid wages, is entitled to priority vis--vis any
claim of any retired or previous partner insofar as such retired
partner's interest in the dissolved partnership is concerned. It is
clear to the Court that under Article 1840 above, Benjamin Yu
is entitled to enforce his claim for unpaid salaries, as well as
It is at the same time also evident to the Court that the new
partnership was entitled to appoint and hire a new general or
assistant general manager. The non-retention of Benjamin Yu
as Assistant General Manager did not therefore constitute
unlawful termination, or termination without just or authorized
cause. We think that the precise authorized cause for
termination in the case at bar was redundancy. The new
partnership had its own new General Manager, apparently Mr.
Willy Co, the principal new owner himself. It follows that
petitioner Benjamin Yu is entitled to separation pay at the rate
of one month's pay for each year of service that he had
rendered to the old partnership, a fraction of at least six (6)
months being considered as a whole year.
Held:
Yes, a partnership exists between the parties.
Facts:
This case involves the Veteran Army of the Philippines.
Their Constitution provides for the organization of posts.
Among the posts thus organized is the General Henry W.
Lawton Post, No. 1.
March 1, 1903: a contract of lease of parts of a certain
buildings in the city of Manila was signed by Lewis, Stovall,
and Hayes (as trustees of the Apache Tribe, No. 1, Improved
Order of Red Men) as lessors, and McCabe (citing for and on
behalf of Lawton Post, Veteran Army of the Philippines) as
lessee.
The lease was for the term of two years commencing February
1, 903, and ending February 28, 1905.
The Lawton Post occupied the premises in controversy for
thirteen months, and paid the rent for that time. Thereafter, it
abandoned the premises.
While the Supreme Court was unable to find that there was
any specific verbal agreement of partnership, the same may be
implied from the fact as to the purchase of the casco. It is thus
apparent that a complete and perfect contract of partnership
was entered into by the parties.
Council Red Men then filed an action to recover the rent for the
unexpired term of the lease.
Issue:
Whether or not Article 1695 of the Civil Code is applicable to
the Veteran Army of the Philippines. NO
Held:
Council Red Men must show that the contract of lease was
authorized by the Veterans Army
The view most favorable to the appellee (Council Red Men) is
the one that makes the appellant (Veterans Army) a civil
partnership. Assuming that is such, and is covered by the
Article 1769 of the new Civil Code lays down the rule for
determining when a transaction should be deemed a
partnership or a co-ownership. Said article paragraphs 2 and
3, provides;
(2) Co-ownership or co-possession does not itself establish a
partnership, whether such co-owners or co-possessors do or
do not share any profits made by the use of the property;
(3) The sharing of gross returns does not of itself establish a
partnership, whether or not the persons sharing them have a
joint or common right or interest in any property from which the
returns are derived; xxxx
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. There must be a clear
intent to form a partnership, the existence of a juridical
personality different from the individual partners, and the
freedom of each party to transfer or assign the whole property.
In the present case, there is clear evidence of co-ownership
between the petitioners. There is no adequate basis to support
the proposition that they thereby formed an unregistered
partnership. The two isolated transactions whereby they
purchased properties and sold the same a few years thereafter
did not thereby make them partners. They shared in the gross
profits as co- owners and paid their capital gains taxes on their
net profits and availed of the tax amnesty thereby. Under the
circumstances, they cannot be considered to have formed an
unregistered partnership which is thereby liable for corporate
income tax, as the respondent commissioner proposes.
And even assuming for the sake of argument that such
unregistered partnership appears to have been formed, since
there is no such existing unregistered partnership with a
distinct personality nor with assets that can be held liable for
said deficiency corporate income tax, then petitioners can be
held individually liable as partners for this unpaid obligation of
the partnership. However, as petitioners have availed of the
benefits of tax amnesty as individual taxpayers in these
transactions, they are thereby relieved of any further tax
liability arising therefrom.
4.
Facts:
Jose Obillos, Sr. transferred his rights to his four children, the
petitioners, to enable them to build their residences.
Presumably, the Torrens titles issued to them would show that
they were co-owners of the two lots.
After having held the two lots for more than a year, the
petitioners resold them from which they derived a total profit
of P134,341.88 or P33,584 for each of them. They treated the
profit as a capital gain and paid an income tax of P16,792.
One day before the expiration of the five-year prescriptive
period, the Commissioner of Internal Revenue required the
petitioners to pay corporate income tax in addition to individual
income tax. Further, he considered the share of the profits of
each petitioner as taxable in full and not a mere capital gain of
which is taxable. Petitioners are being held liable for
deficiency income taxes and penalties totaling to P127,781.76.
Commissioner acted on the theory that the four petitioners had
formed an unregistered partnership or joint venture within the
meaning of sections 24(a) and 84(b) of the Tax Code.
Issue:
Whether petitioners formed an unregistered partnership; NO
It is error to consider the petitioners as having formed a
partnership under article 1767 of the Civil Code simply
because they allegedly contributed P178,708.12 to buy the two
lots, resold the same and divided the profit among themselves.
As testified by Jose Obillos, Jr., they had no such intention.
They were co-owners pure and simple. Their original purpose
was to divide the lots for residential purposes. The division of
the profit was merely incidental to the dissolution of the coownership.
Article 1769(3) of the Civil Code provides that "the sharing of
gross returns does not of itself establish a partnership, whether
or not the persons sharing them have a joint or common right
or interest in any property from which the returns are
derived". There must be an unmistakable intention to form a
partnership or joint venture.
Facts:
On behalf of "Ocean Quest Fishing Corporation," Antonio Chua
and Peter Yao entered into a Contract for the purchase of
fishing nets from the Philippine Fishing Gear Industries, Inc..
Chua and Yao claimed that they were engaged in a business
venture with Lim Tong Lim, who however was not a signatory
to the agreement.
The sale of the boats, as well as the division among the three
of the balance remaining after the payment of their loans,
proves beyond cavil that F/B Lourdes, though registered in his
name, was not his own property but an asset of the
partnership. It is not uncommon to register the properties
acquired from a loan in the name of the person the lender
trusts, who in this case is the petitioner himself. After all, he is
the brother of the creditor, Jesus Lim.
Buyers, however, failed to pay for the fishing nets and the
floats. Private respondents filed a collection suit against Chua,
Yao and Lim Tong Lim. The suit was brought against the three
in their capacities as general partners, on the allegation that
"Ocean Quest Fishing Corporation" was a nonexistent
corporation as shown by a Certification from the Securities and
Exchange Commission.
RTC ruled that defendants are jointly liable to plaintiff, that their
joint liability could be presumed from the equal distribution of
the profit and loss. CA affirmed.
Issue:
Whether by their acts, Lim, Chua and Yao could be deemed to
have entered into a partnership; YES
From the factual findings of both lower courts, it is clear that
Chua, Yao and Lim had decided to engage in a fishing
business, which they started by buying boats worth P3.35
million, financed by a loan secured from Jesus Lim who was
petitioner's brother. In their Compromise Agreement, they
subsequently revealed their intention to pay the loan with the
proceeds of the sale of the boats, and to divide equally among
them the excess or loss. These boats, the purchase and the
repair of which were financed with borrowed money, fell under
the term "common fund" under Article 1767. The contribution to
such fund need not be cash or fixed assets; it could be an
intangible like credit or industry. That the parties agreed that
any loss or profit from the sale and operation of the boats
would be divided equally among them also shows that they
had indeed formed a partnership.
Partnership extended not only to the purchase of the boat, but
also to that of the nets and the floats. The fishing nets and the
floats, both essential to fishing, were obviously acquired in
furtherance of their business.
Held:
Petitioners did not merely limit themselves to holding the
properties inherited by them. Some of the said properties were
sold at considerable profit, and from the said profit were the
purchase and sale of corporate securities. All the profits from
these ventures were divided among petitioners proportionately
in accordance with their respective shares in the inheritance.
From the moment petitioners allowed not only the incomes
from their respective shares of the inheritance but even the
inherited properties themselves to be used by Lorenzo T. Oa
as a common fund in undertaking several transactions or in
business, with the intention of deriving profit to be shared by
them proportionally, such act was tantamount to actually
contributing such incomes to a common fund and, in effect,
they thereby formed an unregistered partnership within the
purview of the provisions of the Tax Code.
Issue:
Whether petitioner is a real party in interest; NO
Held:
Under Art.1768 of the Civil Code, a partnership "has a juridical
personality separate and distinct from that of each of the
partners." 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,
unfair, or illegal purposes.
In this case, private respondent has not shown that A.C. Aguila
& Sons, Co., as a separate juridical entity, is being used for
fraudulent, unfair, or illegal purposes. Moreover, the title to the
subject property is in the name of A.C. Aguila & Sons, Co. and
the Memorandum of Agreement was executed between private
respondent, with the consent of her late husband, and A.C.
Aguila & Sons, Co., represented by petitioner. Hence, it is the
partnership, not its officers or agents, which should be
impleaded in any litigation involving property registered in its
name.
Alicbusan vs. CA
Facts:
Cesar Cordero and Leopoldo Alicbusan were partners in the
operation of Babys Canteen located in the Philtranco terminal
in Pasay City. Pursuant to their agreement, Cordero assumed
the position of Managing partner while Alicbusan took care of
accounting, records keeping and other comptrollership
functions.
The partnership was to exist for a fixed term, between July
1981 up to July 1984. Upon expiration of the said period, both
of them continued their relationship under the original term.
On May 11, 1990, Cordero filed a complaint for collection for
various sums totaling P209, 497. 36 which he later on
amended to P309, 681. 51. This represented the collectibles
he had from Philtranco, by virtue of an arrangement whereby
Philtranco employees were allowed to buy goods and items
from Babys Canteen on credit, which payments were
subsequently deducted by Philtranco from the employees
salaries. Philtranco would remit the amount to them 15 days
later.
According to Cordero, the remittances of salary deductions for
the months of February up to May 1990 were withheld by
Philtranco due to Alicbusans instigation. He averred that
Alicbusan had done this in bad faith because of business
differences which arose between him and Alicbusan in another
partnership operation in Quezon.
Alicbusans defense is to aver that he transferred all his rights
and interests over Babys Canteen for the sum of P250,000 as
evidenced by a Deed of Sale and Transfer of Right between
the parties on April 5, 1989. Under the said deed Cordero
allegedly bound himself to pay the downpayment of P50,000,
10
Plaintiff did not furnish the supposed P20,000 capital nor did
she furnish any help or intervention in the management of the
theatre. Neither has she demanded from defendant any
accounting of the expenses and earnings of the business. She
was absolutely silent with respect to any of the acts that a
partner should have done; all she did was to receive her share
of P3,000 a month which cannot be interpreted in any manner
than a payment for the use of premises which she had leased
from the owners.
11
12
Navarro vs. CA
CASE: Petition for annulment of judgment: by Sps Navarro;
dismissed by the CA:
Facts:
On July 23, 1976, Olivia V. Yanson filed a complaint against
Lourdes Navarro for "Delivery of Personal Properties With
Damages". The complaint incorporated an application for a writ
of replevin.(*was subsequently amended to include private
respondent's husband, Ricardo B. Yanson, as co-plaintiff, and
petitioner's husband, as co-defendant.)
On July 27, 1976, then Executive Judge Oscar R. Victoriano
approved Yansons application for a writ of replevin. By virtue
of the same, Yanson has recovered the subject chattels.
Subsequently, the Presiding judge rendered a decision
disposing that
1
13
Facts:
Defendant Menzi & Co., Inc. through its president and general
manager, J.M. Menzi, under the authority of the board of
directors, entered into a contract with the plaintiff to engage in
the business of exploiting prepared fertilizers.
April 1955: Pending such civil case, Constantino filed with the
ROD a notice of LIS PENDENS on the area/property which
was converted into a subdivision
May 1955: Owners sold it to Santos. ROD made annotation of
the LP on owners and Santos title
June 1955: They filed a PETITION for cancellation of said LP
14
Held:
15
HELD:
It is Elfledo Lim based on the evidence presented regardless of
Jimmy Yus testimony in court that Jose Lim was the partner. If
Jose Lim was the partner, then the partnership would have
been dissolved upon his death .A partnership is dissolved
upon the death of the partner. Further, no evidence was
presented as to the articles of partnership or contract of
partnership between Jose, Norberto and Jimmy. Unfortunately,
there is none in this case, because the alleged partnership was
never formally organized.
But at any rate, the Supreme Court noted that based on the
functions performed by Elfledo, he is the actual partner.
The following circumstances tend to prove that Elfledo was
himself the partner of Jimmy and Norberto:
1.) Cresencia testified that Jose gave Elfledo P50,000.00, as
share in the partnership, on a date that coincided with the
payment of the initial capital in the partnership;
2.) Elfledo ran the affairs of the partnership, wielding absolute
control, power and authority, without any intervention or
opposition whatsoever from any of petitioners herein;
3.) all of the properties, particularly the nine trucks of the
partnership, were registered in the name of Elfledo;
4.) Jimmy testified that Elfledo did not receive wages or
salaries from the partnership, indicating that what he actually
received were shares of the profits of the business; and
5.) none of the heirs of Jose, the alleged partner, demanded
periodic accounting from Elfledo during his lifetime.
As repeatedly stressed in the case of Heirs of Tan Eng
Kee, a demand for periodic accounting is evidence of a
partnership.
Furthermore, petitioners failed to adduce any evidence to show
that the real and personal properties acquired and registered in
the names of Elfledo and Juliet formed part of the estate of
Jose, having been derived from Joses alleged partnership with
Jimmy and Norberto.
Elfledo was not just a hired help but one of the partners in the
trucking business, active and visible in the running of its affairs
from day one until this ceased operations upon his demise.
The extent of his control, administration and management of
the partnership and its business, the fact that its properties
were placed in his name, and that he was not paid salary or
other compensation by the partners, are indicative of the fact
that Elfledo was a partner and a controlling one at that. It is
apparent that the other partners only contributed in the initial
capital but had no say thereafter on how the business was ran.
Evidently it was through Elfredos efforts and hard work that the
partnership was able to acquire more trucks and otherwise
prosper. Even the appellant participated in the affairs of the
partnership by acting as the bookkeeper sans salary.
16
17
2
3
18
TOCAO vs. CA
OCT. 4, 2000
GR No. 127405
Facts:
Belo, Tocao and Anay entered into a joint venture to distribute
cookware. Belo acted as capitalist, Tocao as president and
general manager and Anay as head of the marketing
department and VP of sales. They operated under the name
Geminesse Enterprise, a sole proprietorship registered in
Marjorie Tocaos name.
The parties agreed that:
a.Belos name should not appear in any documents relating to
their transactions with West Bend Company.
b.Anay would be entitled to 10% of the annual net profits, 6%
overriding commission, 30% of the sales she makes and 2% of
her demonstration services.
The agreement was not reduced to writing.
Anay received her commissions as agreed in 1987. In 1988,
however, she did not receive the same commission, prompting
her to file a complaint for sum of money with damages against
Tocao and Belo.
Tocao and Belo answered that the alleged agreement with
Anay that was neither reduced in writing, nor ratified, was
either unenforceable or void or inexistent. There could not
have been a partnership because Geminesse Enterprise was
the sole proprietorship of Tocao. Also, they alleged that Anay
merely acted as marketing demonstrator of Geminesse
Enterprise for an agreed remuneration, hence was only an
employee.
Trial court and CA ruled in favor of Anay.
Issues:
Whether Anay was a partner or employee in the business?
Partner.
Whether there was dissolution of the partnership?NO.
Held:
(1st Issue) They parties entered into a partnership.
There was indeed an oral partnership agreement between
Tocao, Belo and Anay. It did not matter that the agreement was
not in writing because Article 1771 of the Civil Code provides
that a partnership may be constituted in any form.
The fact that Geminesse Enterprise was registered in Tocaos
name is not determinative of whether or not the business was
19
not
necessarily
Sardane vs. CA
Facts:
Acojedo brought an action in the City Court of Dipolog for
collection of a sum of P5,217.25 based on promissory notes
executed by the herein private respondent Nobio Sardane in
favor of the herein petitioner.
It has been established in the trial court that on many
occasions, Acoejdo demanded the payment of the total amount
of P5,217.25. Due to failure to pay upon extrajudicial demand
(demand letter from a lawyer), Acojedo sought to collect by
filing this case.
City Court of Dipolog issued an order dated May 18, 1976
declaring the private respondent in default and allowed the
petitioner to present his evidence ex-parte. The City Court of
Dipolog rendered judgment by default in favor of the petitioner.
Private respondent filed a motion to lift the order of default
which was granted.
CITY COURT OF DIPOLOG After the trial on the merits, the
City Court of Dipolog rendered its decision in favor of Acojedo
and against Sardaje as follows:
(a) Ordering the Sardaje to pay unto the plaintiff the sum of
(P5,217.25) plus legal interest to commence from April 23,
1976 when this case was filed in court;
Verily, any one of the partners may, at his sole pleasure, dictate
a dissolution of the partnership at will. He must, however, act in
good faith, not that the attendance of bad faith can prevent the
dissolution of the partnership but that it can result in a liability
for damages.
An unjustified dissolution by a partner can subject him to action
for damages because by the mutual agency that arises in a
partnership, the doctrine of delectus personae allows the
(b) pay the plaintiff the sum of P200.00 as attorney's fee and to
pay the cost of this proceeding. 3
20
Issue:
Whether a partnership exists between Acojedo and Sardane
primarily based on the Promissory notes presented as
evidence? NO
Held:
ON THE PROMISSORY NOTES:In the case at bar, the
promissory notes containing a promise to pay a sum certain in
money, payable on demand and the promise to bear the costs
of litigation in the event of the private respondent's failure to
pay the amount loaned when demanded extrajudicially.
THE PNotes clearly denote that the Sardane is obliged to
return the sum loaned to him. On their face, nothing appears to
be vague or ambigous, for the terms of the promissory notes
clearly show that it was incumbent upon the private respondent
to pay the amount involved in the promissory notes if and when
the petitioner demands the same.
It was clearly the intent of the parties to enter into a contract of
loan for how could an educated man like the private
respondent be deceived to sign a promissory note yet
intending to make such a writing to be mere receipts of the
petitioner's supposed contribution to the alleged partnership
existing between the parties?
OTHER EVIDENCE: It has been established in the trial court
that, the private respondent has been engaged in business for
quite a long period of time--as owner of the Sardane Trucking
Service, entering into contracts with the government for the
construction of wharfs and seawall; and a member of the City
Council of Dapitan. It indeed puzzles the COURT how Sardane
could have been misled into signing a document containing
terms which he did not mean them to be.
Court of Appeals held, and SC agrees, that even if
evidence aliunde other than the promissory notes may be
admitted to alter the meaning conveyed thereby, still the
evidence is insufficient to prove that a partnership existed
between the private parties hereto.
As manager of the basnig Sarcado he naturally has some
degree of control over the operations, and maintenance thereof
had to be exercised by herein petitioner.
Bastida vs. Menzi & Co., Inc., et al. which involved the
same factual and legal milieu.
There are other considerations noted by respondent Court
which negate herein petitioner's pretension that he was a
partner and not a mere employee indebted to the present
private respondent.
21
22
That the Party of the First Part will be the administrator of the
same she having financed the construction and improvement
of said fishpond
Eventually, Casteel acquired some portions of the fishpond
from its prior occupants.
Sometime in January 1951 Nicanor Casteel forbade Inocencia
Deluao from further administering the fishpond, and ejected the
latter's representative (encargado), Jesus Donesa, from the
premises
Alleging violation of the contract of service (exhibit A) entered
into between Inocencia Deluao and Nicanor Casteel, Felipe
Deluao and Inocencia Deluao on April 3, 1951 filed an action in
the Court of First Instance of Davao for specific performance
and damages against Nicanor Casteel and Juan Depra (who,
they alleged, instigated Casteel to violate his contract)
THIS IS THE CASE ON MR.
EN BANC
[G.R. No.L-21906. August 29, 1969.]
INOCENCIA DELUAO and FELIPE DELUAO, plaintiffsDeluaos, vs. NICANOR CASTEEL and JUAN DEPRA,
defendants, NICANOR CASTEEL, defendant-Casteel et al.
Now upon MR, among others, it was alleged that ultimately
what transpired between the parties was a contract of
partnership and that the Deluaos submit that Casteel is liable
to the Deluaos for one-half of the fishpond or the actual value
thereof for Casteel's alleged termination of the contract of
partnership.
Deluaos further argue entitlement over the beneficial right over
the fishpond in question since it is the "specific partnership
property" contemplated by Art. 1811 of the Civil Code
Issue:
[related to lesson] Assuming there was a partnership existent
between the parties, whether the fishpond may be considered
as "specific partnership property" contemplated by Art. 1811.
Held: No.
A reading of the said provision will show that what is meant is
tangible property, such as a car, truck or a piece of land, but
not an intangible thing such as the beneficial right to a
fishpond. If what the Deluaos have in mind is the fishpond
itself, they are grossly in error. A fishpond of the public domain
can never be considered a specific partnership property
because only its use and enjoyment never its title or
ownership is granted to specific private persons.
[in case tanungin]
Issue:
Whether there was a contract of partnership between the
parties.IT WAS A TRUST
Held:
The fact that Casteel and Deluao agreed to acquire the
fishpond in question in the name of Casteel alone resulted in a
23
3.
4.
5.
24
1773.NO
Held:
1. Art. 1767. By the contract of partnership, two or more
persons bind themselves to contribute money, property, or
industry to a common fund, with the intention of dividing profits
among themselves.
In their Agreement, petitioners would contribute property to the
partnership in the form of land which was to be developed into
a subdivision; while respondent would give, in addition to his
industry, the amount needed for general expenses and other
costs. Furthermore, the income from the said project would be
divided according to the stipulated percentage. Clearly, the
contract manifested the intention of the parties to form a
partnership.
It should be stressed that the parties implemented the contract.
Thus, petitioners transferred the title to the land to facilitate its
use in the name of the respondent. On the other hand,
respondent caused the subject land to be mortgaged, the
proceeds of which were used for the survey and the
subdivision of the land. As noted earlier, he developed the
roads, the curbs and the gutters of the subdivision and entered
into a contract to construct low-cost housing units on the
property.
Respondent's actions clearly belie petitioners' contention that
he made no contribution to the partnership. Under Article 1767
of the Civil Code, a partner may contribute not only money or
property, but also industry.
2. Art. 1773. A contract of partnership is void, whenever
immovable property is contributed thereto, if an inventory of
25
26
27
28
29
30
HEIRS
OF
TAN
ENG
KEE, petitioners,
vs.
COURT OF APPEALS and BENGUET LUMBER COMPANY,
represented by its President TAN ENG LAY,respondents.
Facts:
Following the death of Tan Eng Kee on September 13, 1984,
Matilde Abubo, the common-law spouse of the decedent,
joined by their children, collectively known as herein petitioners
HEIRS OF TAN ENG KEE, filed suit against the decedent's
brother TAN ENG LAY on February 19, 1990. The complaint
was for accounting, liquidation and winding up of the alleged
partnership formed after World War II between Tan Eng Kee
and Tan Eng Lay, pooling their resources and industry together,
entered into a partnership engaged in the business of selling
lumber and hardware and construction supplies.
They named their enterprise "Benguet Lumber" which they
jointly managed until Tan Eng Kee's death. Petitioners herein
averred that the business prospered due to the hard work and
thrift of the alleged partners. However, they claimed that in
1981, Tan Eng Lay and his children caused the conversion of
the partnership "Benguet Lumber" into a corporation called
"Benguet Lumber Company." The incorporation was
purportedly a ruse to deprive Tan Eng Kee and his heirs of
their rightful participation in the profits of the business.
Issue:
Whether Tan Eng Kee and Tan Eng Lay were partners in
Benguet Lumber.NO!
Held:
A contract of partnership is defined by law as one where:
. . . two or more persons bind themselves to contribute money,
property, or industry to a common fund, with the intention of
dividing the profits among themselves.
Two or more persons may also form a partnership for the
exercise of a profession.
Thus, in order to constitute a partnership, it must be
established that:
(1) two or more persons bound themselves to contribute
money, property, or industry to a common fund, and
(2) they intend to divide the profits among themselves.
The agreement need not be formally reduced into writing, since
statute allows the oral constitution of a partnership, save in two
instances:
(1) when immovable property or real rights are contributed, and
(2) when the partnership has a capital of three thousand pesos
or more.
In both cases, a public instrument is required. An inventory to
be signed by the parties and attached to the public instrument
is also indispensable to the validity of the partnership
whenever immovable property is contributed to the partnership.
31
EUFRACIO
D.
ROJAS, Plaintiff-Appellant,
vs. CONSTANCIO B. MAGLANA,Defendant-Appellee G.R.
No. 30616 : December 10, 1990.
Facts:
On January 14, 1955, Maglana and Rojas executed their
Articles of Co-Partnership called Eastcoast Development
Enterprises (EDE) with only the two of them as partners. The
partnership EDE with an indefinite term of existence was duly
registered on January 21, 1955 with the Securities and
Exchange Commission.
Held:
32
33
34
E.
S.
LYONS, plaintiff-appellant,
vs.
C. W. ROSENSTOCK, Executor of the Estate of Henry W.
Elser, deceased, defendant-appellee.
Facts:
Prior to his death on June 18, 1923, Henry W. Elser was
engaged in buying, selling, and administering real estate. In
several ventures, the plaintiff, E. S. Lyons, had joined with him,
the profits being shared by the two in equal parts. In April,
1919, Lyons, a missionary, went on leave to the United States
and was gone for nearly a year and a half. Elser made a
written statements showing that Lyons was, at that time, half
owner with Elser of three particular pieces of real property.
Concurrently with this act, Lyons execute in favor of Elser a
general power of attorney empowering Elser to manage and
dispose of said properties at will and to represent him fully and
amply, to the mutual advantage of both. During the absence of
Lyons two of the pieces of properties were sold, leaving in his
hands a single piece of property located at Carriedo Street.
In the spring of 1920 the attention of Elser was drawn to a
piece of land, referred to as the San Juan Estate. The amount
required for the first payment was P150,000, and as Elser had
available only about P120,000, including the P20,000
advanced upon the option, it was necessary to raise the
remainder by obtaining a loan for P50,000 which was obtained
from a Chinese merchant named Uy Siuliong. With this money
and what he already had in bank, Elser purchased the San
Juan Estate. For the purpose of the further development of the
property, a limited partnership had been organized by Elser
and three associates, under the name of J. K. Pickering &
Company.
Take note that when Elser obtained the loan of P50,000 to
complete the amount needed for the first payment on the San
Juan Estate, the lender, Uy Siuliong, insisted that Elser should
procure the signature of the Fidelity & Surety Co. on the note
to be given for said loan. But before signing the note with Elser
and his associates, the Fidelity & Surety Co. insisted upon
having security for the liability thus assumed by it. To meet this
requirements Elser mortgaged to the Fidelity & Surety Co. the
equity of redemption in the property owned by himself and
Lyons on Carriedo Street. This mortgage was executed on
June 30, 1920, at which time Elser expected that Lyons would
come in on the purchase of the San Juan Estate. But when he
learned from the letter from Lyons of July 21, 1920, that the
latter had determined not to come into this deal, Elser began to
cast around for means to relieve the Carriedo property of the
encumbrance which he had placed upon it. For this purpose,
on September 9, 1920, he addressed a letter to the Fidelity &
Surety Co., asking it to permit him to substitute a property
owned by himself at M. H. del Pilar Street, Manila, and 1,000
35
Held:
There was no de facto partnership formed
The rule is, while it has been held that as between themselves
the rights of the stockholders in a defectively incorporated
association should be governed by the supposed charter and
the laws of the state relating thereto and not by the rules
governing partners, it is ordinarily held that persons who
attempt, but fail, to form a corporation and who carry on
business under the corporate name occupy the position of
partners inter se. Thus, where persons associate themselves
together under articles to purchase property to carry on a
business, and their organization is so defective as to come
short of creating a corporation within the statute, they become
in legal effect partners inter se, and their rights as members of
the company to the property acquired by the company will be
recognized
In fact, it was found that when Lyons had arrived in Manila and
in the course of a conversation with Elser, he told the latter to
let the Carriedo mortgage remain on the property. The trial
court was then well justified in accepting as a proven fact the
consent of Lyons for the mortgage to remain on the Carriedo
property. This concession was not only reasonable under the
circumstances, but in view of the further fact that Elser had
given to Lyons 200 shares of the stock of the J. K. Pickering &
Co., having a value of nearly P8,000 in excess of the
indebtedness which Elser had owed to Lyons upon statement
of account.
Moreover, it is also plain that no money actually deriving from
this mortgage was ever applied to the purchase of the San
Juan Estate. What really happened was the Elser merely
subjected the property to a contingent liability, and no actual
liability ever resulted therefrom. The financing of the purchase
of the San Juan Estate, apart from the modest financial
participation of his three associates in the San Juan deal, was
the work of Elser accomplished entirely on his own account.
PIONEER INSURANCE v. CA
Note:Jacob Lim : purchaser of the plane // Maglana, Cervantes
and BORMAHECO: invested funds to purchase the plane //
Pioneer Insurance: insurer of the plane // Japan Domestic
Airlines: vendor of the plane
Facts:
Jacob S. Lim was engaged in the airline business as owneroperator of Southern Air Lines (SAL) a single proprietorship.
He bought two two DC-3A Type aircrafts and one set of
necessary spare parts from Japan Domestic Airlines. Jacob S.
Lim was able to get funds for payment out of Constancio
Maglana,
Francisco
and
Modesto
Cervantes
and
BORMAHECO. The funds were supposed to be their
contributions to a new corporation proposed by Lim to expand
his airline business.
Contrary to the agreement among the Lim and Maglana,et al.,
Lim in connivance with Pioneer Insurace, signed and executed
the alleged chattel mortgage and surety bond agreement in his
personal capacity as the alleged proprietor of the SAL.
Maglana, Cervantes and Bormaherco learned for the first time
of this trickery and misrepresentation of the other, Jacob Lim,
when the herein plaintiff chattel mortgage allegedly executed
by defendant Lim, thereby forcing them to file an adverse claim
in the form of third party claim.
Issue:
What legal rules govern the relationship among co-investors
whose agreement was to do business through the corporate
vehicle but who failed to incorporate the entity in which they
had chosen to invest?
Relevance of the issue: If it the law on partnership that
governs, then Maglana, Cervantes and BORMAHECO should
However, in this case, it was shown that Lim did not have the
intent to form a corporation with Maglana et al. This can be
inferred from acts of unilaterally taking out a surety from
Pioneer Insurance and not using the funds he got from
Maglana et al. The record shows that Lim was acting on his
own and not in behalf of his other would-be incorporators in
transacting the sale of the airplanes and spare parts.
36
(b)
In determining his distributive share in the net income
of the partnership, each partner
Facts:
These two consolidated special civil actions for prohibition
challenge, in G.R. No. 109289, the constitutionality of Republic
(1)
Shall take into account separately his distributive
share of the partnership's income, gain, loss, deduction, or
37
38
Facts:
A search warrant was issued to be served upon Bache & Co.
by request of the Commission of Internal Revenue.
The search warrant was served at the offices of petitioner
corporation on Ayala Avenue, Makati, Rizal.
Issue:
Whether a corporation is entitled to protection against
unreasonable searches and seizures.YES
Held:
"Although, for the reasons above stated, we are of the opinion
that an officer of a corporation which is charged with a violation
of a statute of the state of its creation, or of an act of Congress
passed in the exercise of its constitutional powers, cannot
refuse to produce the books and papers of such corporation,
we do not wish to be understood as holding that a corporation
is not entitled to immunity, under the 4th Amendment, against
unreasonable searches and seizures. A corporation is, after all,
but an association of individuals under an assumed name and
with a distinct legal entity. In organizing itself as a collective
body it waives no constitutional immunities appropriate to such
body. Its property cannot be taken without compensation. It
can only be proceeded against by due process of law, and is
protected, under the 14th Amendment, against unlawful
discrimination . . ." (Hale v. Henkel, 201 U.S. 43, 50 L. ed.
652.)
"In Linn v. United States, 163 C.C.A. 470, 251 Fed. 476, 480, it
was thought that a different rule applied to a corporation, the
ground that it was not privileged from producing its books and
papers. But the rights of a corporation against unlawful search
and seizure are to be protected even if the same result might
have been achieved in a lawful way." (Silverthorne Lumber
Company, Et. Al. v. United States of America, 251 U.S. 385, 64
L. ed. 319.)
In Stonehill, Et. Al. v. Diokno, Et Al., supra, this Court impliedly
recognized the right of a corporation to object against
unreasonable searches and seizures,
"As regards the first group, we hold that petitioners herein have
no cause of action to assail the legality of the contested
warrants and of the seizures made in pursuance thereof, for
the simple reason that said corporations have their respective
personalities, separate and distinct from the personality of
herein petitioners, regardless of the amount of shares of stock
or the interest of each of them in said corporations, whatever,
the offices they hold therein may be. Indeed, it is well settled
that the legality of a seizure can be contested only by the party
whose rights have been impaired thereby, and that the
39
xxx
xxx
The witness may not refuse to comply with the order on the
basis of his privilege against self-incrimination; but no
testimony or other information compelled under the order (or
any information directly or indirectly derived from such
testimony, or other information) may be used against the
witness in any criminal case, except a prosecution for perjury,
giving a false statement, or otherwise failing to comply with the
order.
The constitutional safeguard against unreasonable searches
and seizures finds no application to the case at bar either.
There has been no search undertaken by any agent or
representative of the PCGG, and of course no seizure on the
occasion thereof.
40