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case digests on law on partnership

Friday, March 28, 2014

Lim vs. Philippine Fishing Gear Industries Inc

Lim vs. Philippine Fishing Gear Industries Inc. [GR 136448, 3 November 1999]

FACTS: Lim Tong Lim requested Peter Yao and Antonio Chuato engage in commercial fishing with him. The three
agreed to purchase two fishing boats but since they do not have the money they borrowed from one Jesus Lim
the brother of Lim Tong Lim. Subsequently, they again borrowed money for the purchase of fishing nets and other
fishing equipments. Yao and Chua represented themselves as acting in behalf of “Ocean Quest Fishing
Corporation” (OQFC) and they contracted with Philippine Fishing Gear Industries (PFGI) for the purchase of
fishing nets amounting to more than P500k. However, they were unable to pay PFGI and hence were sued in their
own names as Ocean Quest Fishing Corporation is a non-existent corporation. Chua admitted his liability while
Lim Tong Lim refused such liability alleging that Chua and Yao acted without his knowledge and consent in
representing themselves as a corporation.

ISSUE: Whether Lim Tong Lim is liable as a partner

HELD: Yes. It is apparent from the factual milieu that the three decided to engage in a fishing business. Moreover,
their Compromise Agreement had revealed their intention to pay the loan with the proceeds of the sale and to
divide equally among them the excess or loss. The boats and equipment used for their business entails their
common fund. 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 Can't We Talk
divided equally among them also shows that they had indeed formed a partnership. The principle of corporation about...
by estoppel cannot apply in the case as Lim Tong Lim also benefited from the use of the nets in the boat, which $16.79
was an asset of the partnership. Under the law on estoppel, those acting in behalf of a corporation and those
benefited by it, knowing it to be without valid existence are held liable as general partners. Hence, the question as Shop now
to whether such was legally formed for unknown reasons is immaterial to the case.

Posted by Lendferndz Biadno at 3:02 AM

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