Partnership cases doctrines

MENDOZA V. PAULE
Even though the parties may denominate the contract as acontract of agency, the court
may still interpret it as one of partnership if facts show that such is really the contract
entered into between them.
An agency cannot be revoked if a bilateral contract depends upon it, or if it is the means
of fulfilling an obligation already contracted, or if a partner is appointed manager of a
partnership in the contract of partnership and his removal from the management is
unjustifiable.
ESTANISLAO V. CA
Just because there is a stipulation cancelling and superseding the previous Joint Affidavit
does not automatically mean that whatever partnership agreement there was in said
agreement had thereby been abrogated. The stipulation was provided simply because there
are 2 similar clauses w/ respect to the advance rentals in the previous agreement & the
latter one hence the needs to cancel the duplication.
YULO V. YANG CHIAO SHENG
The following are the requisites of partnership: (Art. 1767,Civil Code.) 2 or more persons
who bind themselves to contribute money, property, or industry to a common fund;
Intention on the part of the partners to divide the profits among themselves.
Were she really a partner, her first concern should have been to find out how the business
was progressing, whether the expenses were legitimate, whether the earnings were
correct, etc. She was absolutely silent with respect to any of the acts that a partner
should have done; all that 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 the premises which she
had leased from the owners.
EVANGELISTA V. COLLECTOR OF REVENUE
the essential elements of a partnership are two, namely: an agreement to contribute
money, property or industry to a common fund; intent to divide the profits among the
contracting parties.
The ff acts, when taken collectively, leave no room for doubt that the intent of the
parties was to create a partnership: the creation of a common fund, the investing of such
in several transactions, the leasing out of the lots purchased w/ said money, and the
management of these properties by one person.

For purposes of the tax on corporations, our National Internal Revenue Code, includes
these partnerships. With the exception only of duly registered general co partnerships
within the purview of the term "corporation."
LYONS V. ROSENTOCK
The fact that 1 or 2 co-owners subjects their joint property to a contingent liability w/c
results in no damage doesnt create a trust in favor of the other, and the liability thereby
incurred must be determined in conformity w/ the principles of the civil law properly
applicable to the case. When there are 2 individuals and one of them bought a property
while the other one was away to promote a suburban devt then subjects a mortgaged
property w/they own to a 2nd mortgage, to secure a loan to complete the payment of the
purchased property, and when the 2nd individual returns, he consents to the mortgage -->
Does not create a trust in favor of the 2nd individual, w/ the effect of making him a copartner in the ownership of the property purchased as aforesaid.
FERNANDEZ V. DELA ROSA
When the fact is established that parties have mutually contributed to the purchase of a
common stock, under circumstances w/c afford no different explanation of their object, it
must be deduced that they intended a joint interest in the profits therefrom. Where
parties fail to agree upon articles of co-partnership and some of the contributions of one
partner, less than all, are returned to him and accepted w/ an express reservation of his
rights as partner, the partnership is not dissolved nor does he waive his right to an
accounting of the profits. The execution of a written agreement was not necessary in
order to give efficacy to the verbal contract of partnership as a civil contract, the
contributions of the partners not having been in the form of immovables or rights in
immovables.
WOODHOUSE V. HALILI
The main cause that induced Halili to enter into the partnership agreement was the ability
of Woodhouse to get the exclusive franchise for the partnership. Halili was made to
believe that Woodhouse had exclusive franchise but in fact, he no longer had it at the
time the contract was perfected. Woodhouse is guilty of a false representation that is not
the causal consideration, or the principal inducement, that led Halili to enter into the
partnership agreement. Halili cannot be compelled to carry out the agreement nor execute
the partnership papers because his obligation, being an obligationto do,is subject to the
restriction that hecannot be compelled to doa very personal act as it is considered an act
of violence to do so.

ONA V. CIR
For tax purposes, the co-ownership of inherited properties is automatically converted into
an unregistered partnership the moment the said common properties and/or incomes
derived therefrom are used as a common fund with intent to produce profits for the heirs
in proportion to their respective shares in the inheritance as determined in a project
partition.
From the moment of such partition, the heirs are entitled already to their respective
definite shares of the estate and the incomes. If after such partition, he allows his share
to beheld in common with his co-heirs under a single management to be used with the
intent of making profit, there can be no doubt that, even if no document or instrument
were executed for the purpose, for tax purposes, at least, an unregistered partnership is
formed.
LITONJUA V. LITONJUA
A joint venture is hardly distinguishable from, and may be likened to, a partnership since
their elements are similar i.e.,community of interests in the business and sharing of
profits and losses. Being a form of partnership , a joint venture is generally governed by
the law on partnership.
The MOA is null and void for purposes of establishing the existence of a valid contract of
partnership because it is not a public instrument and there was no inventory of the
immovable property, w/c was the alleged contribution to the partnership duly signed by
the parties.
A complaint for delivery and accounting of partnership property based on such void or
legally non-existent actionable document is dismissible for failure to state a cause of
action.
ANGELES V. SECRETARY OF JUSTICE
Mere failure to register the contact of partnership w/ the SEC does not invalidate a
contract that has the essential requisites of partnership. A partnership may exist even if
the partners dont use the words partner of partnership

TORRES V. CA
Under the agreement, party 1 would contribute property to the partnership in the form of
land w/c was to be developed into a subdivision while party 2 would give, in addition to his
industry, the amount needed for gen. expenses and other costs. Furthermore, the income
from the said project would be divided acc. to the stipulated %. Clearly, the contract
manifested the intention of the parties to form a partnership.
Consideration, more properly denominated as cause, can take diff. forms, such as the
prestation or promise of a thing or service by another.
ROJAS V. MAGLANA
Withdrawing partner is liable for damages if the cause of withdrawal is not justified or no
cause was given but in no case can he be compelled to be in the firm.
A party who has undertaken to contribute a sum of money fails to do so, he becomes a
debtor of the partnership for whatever he promised to contribute and for interests and
damages from the time he should have complied w/ his obligation. Being a contract of
partnership, each partner must share in the profits and losses of the venture. Thats the
essence of a partnership.
PIONEER INSURANCE V. CA
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, and their rights as members
of the company to the property acquired by the company will be recognized
Such a relation doesnt necessarily exist however for ordinarily persons cannot be made to
assume the relation of partners as between themselves when their purpose is that no
partnership shall exist and it should be implied only when necessary to do justice between
the parties. One who takes no part except to subscribe for stock in a proposed corp. w/c
is never legally formed doesnt become a partner w/ other subscribers who engage in
business under the name of the pretended cor., so as to be liable as such in an action for
settlement of the alleged partnership &contribution
LIM TONG LIME V. PHIL
A partnership may be deemed to exist among parties who agree to borrow money to pursue
a business and to divide the profits or losses that may arise therefrom, even if its shown
that they havent contributed any capital of their own to a common fund as their
contribution to such fund could be intangible life credit or industry.

Under the law on estoppel, those acting on behalf of a corporation and those benefited by
it, knowing it to be w/o valid existence, are held liable as general partners.

ORTEGA V. CA
A partnership that doesnt fix its term is a partnership at will.
The birth & life of a partnership at will is predicated on the mutual desire and consent of
the partners. The right to choose w/ whom a person wishes to associate himself is the
very foundation & essence of that partnership. Its continued essence in turn, dependent
on the constancy of that mutual resolve, along w/ each 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. Neither would the presence of a period for its
specific duration or the statement of a particular purpose for its creation prevent the
dissolution of any partnership by an actor will of a partner. Upon its dissolution, the
partnership continues and its legal personality is retained until the complete winding up of
its business culminating in its termination. The liquidation of the assets of the partnership
following its dissolution is governed by various provisions of the Civil Code.
It wouldnt be right to let any of the partners remain in the partnership under such an
atmosphere of animosity.
AGUILA V. CA
A partnership has a juridical personality separate and distinct from that of each of the
partners therefore it is the partnership, not its officers or agents, w/c should be
impleaded in any litigation involving property registered in its name
VILLAREAL V. RAMIREZ
Since the capital was contributed to the partnership, not to petitioners, its the
partnership that must refund the equity of the retiring partners for the partnership has
its own separate juridical personality.
A partnership can only pay out what it has in its coffers, w/c consists of all its assets.
Before the partners can be paid their shares, the creditors of the partnership must first
be compensated.
US V. CLARIN
The failure on the part of the industrial partners to return to the capitalist partner
brought the capital brought into the partnership by the latter is not an act constituting
the crime of estafa

EVANGELSITA V. ABAD SANTOS

It isnt disputed that the prohibition against an industrial partner engaging in the business
for himself seeks to prevent any conflict of interest between the industrial partner and
the partnership and to insure faithful compliance by said partner w/ his prestation.
Being a judge in the Court of Manila can hardly be characterized as a business.

LITTON V. HILL & CERON

The stipulation in the art. Of partnership that any of the two managing partners may
contract & sign in the name of the partnership w/ the consent of the other, undoubtedly
creates an obligation between the 2 partners, w/c consists in asking the others consent
before contracting for the partnership. This obligation of course is not imposed upon
a3rdperson who contacts w/ the partnership.
A 3rd
person may and has the right to presume that the partner w/ whom he contracts has, in
the ordinary & natural course of business, the consent of his co-partner for otherwise he
would not enter into the contract.
Unless the contrary is shown, namely that one of the partners didnt consent to his
copartner entering into a contract w/ a 3rd person, and that the latter w/ knowledge
thereof entered into said contract, the aforesaid presumption w/ all its force and legal
effects should be taken into account.
Under Art. 130 of the Code of Commerce, when, not only w/o the consent but against the
will of any of the managing partners, a contract is entered into w/ a 3rd
person who acts in good faith, and the transaction is of the kind of business in w/c the
partnership is engaged, said contract shall not be annulled w/o prejudice to the liability of
the guilty partner. This is to protect the 3rd
person who contracts w/ one of the managing partners of the partnership, thus avoiding
fraud and deceit to w/c he may easily fall a victim w/o thisprotection.
YU V. NLRC
The legal effect of the changes in the membership of the partnership was the dissolution
of the old partnership, and the emergence of a new firm composed of Willy Co and
Emmanuel Zapanta.

Occurrence of events w/c precipitate the legal consequences of dissolution of a

partnership do not automatically result in the termination of the legal personality of the
old partnership The legal personality of the expiring partnership persists for the limited
purpose of winding up and closing of the affairs of the partnership.
A withdrawing partner remains liable to a 3rd party creditor of the old partnership.
The new partnership is entitled to appoint and hire a new gen. or asst gen. manager to run
the affairs of the business enterprise taken over.
SINGSON V. ISABELA
When the partnership is dissolved, the partnership is not terminated but continues until
winding up of its business.
Properties is dissolved but unliquidated partnership w/c was mortgaged judicially
foreclosed and then sold a t public auction to the partner who had withdrawn still belong
to the partnership and the said properties as well as of the withdrawn partner are
answerable to liabilities of partnership and to innocent 3rd persons. Partner who had
withdrawn from partnership is relieved from partnership liability only when there s
liquidation of assets of partnership and his withdrawal had been published.
Where a former partner entered into agreement w/remaining partners to continue
business of partnership and 3rd parties were misled into believing that they are dealing with
the same old partnership, that partner who has withdrawn is still liable to partnership
liabilities.
JO CHUNG CANG. V. PACIFIC
Those who seek to avail themselves of the protection of laws permitting the creation of
limited partnerships must show a substantially full compliance w/ such laws. A limited
partnership that hasnt complied w/ the law of its creation isnt considered a limited
partnership at all, but a general partnership in w/c all the members are liable.
To establish a limited partnership, there must be, at least, one general partner and the
name of at least one of the general partners must appear in the firm name.
Contracts entered into by commercial associations defectively organized are valid when
they are voluntarily executed by the parties, if the only controversy relates to whether or
not they complied w/ the agreement. The legal intention deducible from the acts of the
parties controls in determining the existence of a partnership. If they intend to do a thing
w/c in law constitutes a partnership, they are partners, although their purpose was to
avoid the creation of such relation
JURISPRUDENCE
BASTIDA vs. MENZI

* articles of association by which 2 or more persons obligate themselves to place in a

common fund any property, industry, or any of these things, in order to obtain profit, shall
be COMMERCIAL
BORJA vs. ADDISON
* a surviving husband may form a partnership with the heirs of the deceased wife for the
management and control of the community property
BUT in the absence of the formalities prescribed by the Civil Code, knowledge of the
existence of the new partnership or community of property must at least be brought home
to third persons dealing with the surviving husband in regard to the community real property
in order to bind them by the community agreement
KIEL vs. SABERT
* the declarations of one partner, not made in the presence of his co-partner, are not
competent to prove the existence of a partnership between them as against such partner
* the existence of a partnership cannot be established by general reputation, rumor or
hearsay
EVENGELISTA vs. C.I.R.
* By the contract of partnership 2 or more persons bind themselves to contribute money,
property, or industry to a common fund, with the intention of dividing the profits among
themselves
ESSENTIAL ELEMENTS of a PARTNERSHIP
1. an agreement to CONTRIBUTE money, property, or industry to a COMMON FUND
2. intent to divide the profits among the contracting parties
* when our internal Revenue Code includes partnerships among the entities subject to
the tax on corporations, said code which are not necessarily partnerships in the
technical sense of the term
* PARTNERSHIPS includes a SYNDICATE, GROUP, POOL, JOINT VENTURE, or other
unincorporated organization, through or by the means of which any business, financial
operation, or venture is carried on
* a joint venture need not be undertaken in any of the standard forms,
or in conformity with the usual requirements of the law on partnerships, in order that one
could be deemed constituted for purposes of the TAX on corporations
PASCUAL vs. C.I.R.
* co-ownership or co-possession does not itself establish a partnership, whether such coowners or co-possessors do or do not share any profits made by the use of the property
* the sharing of gross returns does not itself establish a partnership, within the persons
sharing them have a joint or common right or interest in any property from which the returns
are derived
* aside from the circumstances of profit, the presence of other elements constituting
partnership is necessary, such as:
1. the clear intent to form a partnership
2. the existence of a juridical personality different from that of the individual partners
AND

3. the freedom to transfer or assign any interest in the property by one with the consent
of the others
* an isolated transaction whereby 2 or more persons contribute funds to buy certain real
estate for profit in the absence of other circumstances showing a contrary intention cannot
be considered a partnership
* persons who contribute property or funds for a common enterprise and agree to share
the gross returns of that enterprise in proportion to their contribution, BUT who severally
retain the title to their respective contribution, are not thereby rendered partners
they have no common stock or capital and no community of interest as principal
proprietors in the business itself which the proceeds derived
* a joint purchase of land, by two does not constitute a co-partnership in respect thereto,
NOR does an agreement to share the profits and losses on the sale of land create a
partnership
* in order to constitute a PARTNERSHIP INTER SESE there must be:
A) an intent to form the same
B) generally participating in both profits and losses
AND
C) such a community of interest, as far as third persons are concerned as
enables each party to make a contract, manage the business, and dispose of
the whole property
* the common ownership of property does not itself create a partnership between the
owners, though they may use it for the purpose of making gains AND they may without
becoming partners, agree among themselves as to the management and use of such
property and the application of the proceeds therefrom
* the sharing of returns does not in itself establish a partnership within the persons sharing
therein have a joint or common right or interest in the property
there must be:
1. clear intent to form a partnership
2. the existence of a juridical personality different from the individual partners
AND
3. the freedom of each party to transfer or assign the whole property
DUTERTE vs. RALLOS
* an agreement between 2 persons to operate a cockpit, by which one is to contribute his
services and the other to provide the capital, the profits to be divided between them,
constitutes a partnership
DELUAO vs. CASTEEL
* a contract of partnership to exploit a fishpond pending its award to any qualified party or
applicant is VALID BUT a contract of partnership to divide the fishpond after such award is
ILLEGAL
* one of the causes of dissolution is any event which make it unlawful for the business of
the partnership to be carried on or for the members to carry it on in partnership
C.I.R. vs. SUTER
* a UNIVERSAL PARTNERSHIP requires either that the object of the association be:
1. all the present property of the partners as contributed by them to the common fund
OR

2. all that the partners may acquire by their industry or work during the existence of the
partnership
* the subsequent marriage of the partners could not operate to dissolve the partnership
because it is not one of the causes provided for dissolution by law with regards to limited
partnerships
* partnership has distinct and separate personality from that of its partners
* a husband and wife may not enter into a contract of general co-partnership/ UNIVERSAL
partnership
ACOAD vs. MABATO
* 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
EVANGELISTA vs. ABAD SANTOS
* an INDUSTRIAL PARTNER cannot engage in BUSINESS FOR HIMSELF, UNLESS the
partnership expressly permits him to do so
IF HE SHOULD DO SO, the capitalist partners may either:
1. EXCLUDE him from the firm
OR
2. AVAIL themselves of the benefits which he may have obtained in violation of this
provision
with a right to DAMAGES in either case
* the prohibition against an industrial partner engaging in business for himself seeks to
prevent any conflict of interest between the industrial partner and the partnership and to
ensure faithful compliance by said partner with his prostation