Evangelista v. Abad Santos | June 28, 1973 | G.R. No.

L-31684, 51 SCRA 416 | o byway of affirmative defense alleged that amended Articles of Co-
Makalintal, J
Topic: Obligation of Partnership Inter Se; Not to engage in another business partnership did not express true agreement of parties, which was
Pet: Evangelista & Co., Domingo C. Evangelista, Jr., Conchita B. Navarro And that plaintiff was not an industrial partner
Leonarda Atienza Abad Sabtos  she did not in fact contribute industry to the partnership
Resp: Estrella Abad Santos
 her share of 30% was to be based on profits which might be
- Oct 9, 1954: a co-partnership with Pets as capitalist partners was formed under
realized by partnership only until full payment of loan of
name “Evangelista & Co.”
P30k which it obtained in Dec 1955 from Rehab Finance
- June 7, 1955: the Articles of Co-partnership were amended including Resp
Corporation – plaintiff signed promissory noted as co-
Estrella Abad Santos, as an industrial partner
maker and mortgaged her property as security
o Original Capitalist Partners: Domingo Evangelista, Jr., Leonardo
CFI: rendered judgement declaring her an industrial partner, ordering defendants to
Atienza Abad Santos and Conchita P, Navarro remained in same
render an accounting of business operations, pay plaintiff amounts due her as her share
capacity with P17.5k each contribution
in partnership profits and or dividends as may be due her, pay plaintiff 2k attys fees
- Amended Articles:
and costs of suit
o “contribution of Estrella Abad Santos consists of her industry being
an industrial partner”
Resps appealed to CA that affirmed the judgements of the court a quo.
o Re: profits and losses “shall be divided and distributed among
ISSUE & HELD: W/N Articles of Co-partnership shall be considered as a conclusive
partners ... in the proportion of 70% for 1st three partners, Domingo
evidence of respondent’s status as a limited partner? NO.
C. Evangelista, Jr., Conchita P. Navarro and Leonardo Atienza Abad
Santos to be divided among them equally; and 30% for 4th partner
Court held that despite genuineness of the Articles of Co-partnership the same did not
Estrella Abad Santos”
express the true intent and agreement of the parties, however, as the subsequent events
- Dec 17, 1963: Resp filed suit against 3 capitalist partners in CFI, alleging:
and testimonial evidences indicate otherwise, the Court upheld that respondent is an
o the partnership, which was also made a party-defendant, had been
industrial partner of the company.
paying dividends to the partners except to her
o despite her requests and demands, they refused to let her examine
(Art 1789) ‘An industrial partner cannot engage in business for himself, unless the partnership
the partnership books or give her info regarding the partnership
expressly permits him to do so; and if he should do so, the capitalist partners may either exclude
affairs to pay her any share in dividends declared by partnership
him from the firm or avail themselves of the benefits which he may have obtained in violation of
o She prayed that Pets be ordered to render an accounting of
this provision, with a right to damages in either case.’
partnership business and to pay her corresponding share in
dividends. (partnership profits after accounting, plus atty’s fees and
Pages 32-33 of appellants' brief: there is an overriding fact which proves that the parties
costs)
to the Amended Articles of Partnership, Ex "A", did not contemplate to make appellee
- Answer of Defendants, denied:
Estrella Abad Santos, an industrial partner of Evangelista & Co.
o ever having declared dividends or distributed profits of partnership
- It is an admitted fact that since before execution of the amended articles of
o plaintiff ever demanded that she be allowed to examine partnership
partnership, Ex A, appellee Estrella Abad Santos has been, and up to the
books
present time still is, one of the judges of the City Court of Manila, devoting all
her time to the performance of the duties of her public office. This fact proves
beyond peradventure that it was never contemplated between the parties, for
 she could not lawfully contribute her full time and industry which is the
obligation of an industrial partner pursuant to Art. 1789, Civil Code.

Though being a judge of the City Court of Manila cannot be characterized a business
and/or may be considered an antagonistic business to the partnership, Pets reached
the decision that respondent be excluded from and deprived of her alleged share in the
interest or participation as an alleged industrial partner in the net profits or income of
the partnership.

- It is not disputed that the provision against the industrial partner engaging
in 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 with this prestation.
- No pretense, however, even on the part of appellee is engaged in any
business antagonistic to that of appellant company, since being a Judge of
one of the branches of the City Court of Manila can hardly be characterized
as a business
- Appellee has faithfully complied with her prestation with respect to
appellants is clearly shown by the fact that it was only after filing of the
complaint in this case and the answer thereto appellants exercised their right
of exclusion

Having always known the respondent is a City Judge even before she joined the
partnership, why did it take petitioners so many years before excluding her from said
company? Furthermore, the act of exclusion is premised on the ground that respondent
has always been a partner, an industrial partner. In addition, the Court further held
that with the consideration of Article 1767 that ‘By a 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’, the services
rendered by respondent may legitimately be considered the respondent’s contribution
to the common fund.
HELD: Hold with LC, Appellee is an industrial partners with right to demand formal
accounting and receive her share in net profit from such, based on Art 1899 of NCC.
'ART. 1899. Any partner shall have the right to a formal account as to partnership
affairs:
(1) If he is wrongfully excluded from the partnership business or possession of
its property by his co-partners;
(2) If the right exists under the terms of any agreement;
(3) As provided by article 1807;
(4) Whenever other circumstance render it just and reasonable.