AURELIO K. LITONJUA, JR., Petitioner, G.R. NOS.

166299-300

- versus '

EDUARDO K. LITONJUA, SR., ROBERT T.

YANG, ANGLO PHILS. MARITIME, INC.,
CINEPLEX, INC., DDM GARMENTS, INC.,
EDDIE K. LITONJUA SHIPPING AGENCY,
INC., EDDIE K. LITONJUA SHIPPING CO.,
INC., LITONJUA SECURITIES, INC.
(formerly E. K. Litonjua Sec), LUNETA
THEATER, INC., E & L REALTY, (formerly
E & L INTL SHIPPING CORP.), FNP CO.,
INC., HOME ENTERPRISES, INC.,
BEAUMONT DEV. REALTY CO., INC.,
GLOED LAND CORP., EQUITY TRADING
CO., INC., 3D CORP., 'L DEV. CORP, LCM
THEATRICAL ENTERPRISES, INC.,
LITONJUA SHIPPING CO. INC., MACOIL
INC., ODEON REALTY CORP., SARATOGA
REALTY, INC., ACT THEATER INC.
(formerly General Theatrical & Film
Exchange, INC.), AVENUE REALTY, INC.,
AVENUE THEATER, INC. and LVF
PHILIPPINES, INC., (Formerly VF
PHILIPPINES),

Respondents.

In this petition for review under Rule 45 of the Rules of Court, petitioner Aurelio K. Litonjua, Jr. seeks to nullify
and set aside the Decision of the Court of Appeals (CA) dated March 31, 2004 [1] in consolidated cases C.A. G.R.
Sp. No. 76987 and C.A. G.R. SP. No 78774 and its Resolution dated December 07, 2004, [2] denying petitioner's
motion for reconsideration.

The recourse is cast against the following factual backdrop:

Petitioner Aurelio K. Litonjua, Jr. (Aurelio) and herein respondent Eduardo K. Litonjua, Sr. (Eduardo) are brothers.
The legal dispute between them started when, on December 4, 2002, in the Regional Trial Court (RTC) at Pasig
City, Aurelio filed a suit against his brother Eduardo and herein respondent Robert T. Yang (Yang) and several
corporations for specific performance and accounting. In his complaint, [3] docketed as Civil Case No. 69235 and
eventually raffled to Branch 68 of the court, [4] Aurelio alleged that, since June 1973, he and Eduardo are into a
joint venture/partnership arrangement in the Odeon Theater business which had expanded thru investment in
Cineplex, Inc., LCM Theatrical Enterprises, Odeon Realty Corporation (operator of Odeon I and II theatres),
Avenue Realty, Inc., owner of lands and buildings, among other corporations. Yang is described in the complaint
as petitioner's and Eduardo's partner in their Odeon Theater investment. [5] The same complaint also contained
the following material averments:

3.01 On or about 22 June 1973, [Aurelio] and Eduardo entered into a joint venture/partnership for
the continuation of their family business and common family funds '.

3.01.1 This joint venture/[partnership] agreement was contained in a memorandum addressed by

Eduardo to his siblings, parents and other relatives. Copy of this memorandum is attached hereto
and made an integral part as Annex 'A and the portion referring to [Aurelio] submarked as Annex
'A-1.

3.02 It was then agreed upon between [Aurelio] and Eduardo that in consideration of [Aurelio's ]
retaining his share in the remaining family businesses (mostly, movie theaters, shipping and land
development) and contributing his industry to the continued operation of these businesses, [Aurelio]
will be given P1 Million or 10% equity in all these businesses and those to be subsequently acquired
by them whichever is greater. . . .
 4.01 ' from 22 June 1973 to about August 2001, or [in] a span of 28 years, [Aurelio] and Eduardo
had accumulated in their joint venture/partnership various assets including but not limited to the
corporate defendants and [their] respective assets.

4.02 In addition . . . the joint venture/partnership ' had also acquired [various other assets], but
Eduardo caused to be registered in the names of other parties' .

xxx xxx ' xxx

4.04 The substantial assets of most of the corporate defendants consist of real properties '. A list of
some of these real properties is attached hereto and made an integral part as Annex 'B.
xxx ' xxx xxx

5.02 Sometime in 1992, the relations between [Aurelio] and Eduardo became sour so that [Aurelio]
requested for an accounting and liquidation of his share in the joint venture/partnership [but these
demands for complete accounting and liquidation were not heeded].

xxx xxx xxx

5.05 What is worse, [Aurelio] has reasonable cause to believe that Eduardo and/or the corporate
defendants as well as Bobby [Yang], are transferring . . . various real properties of the corporations
belonging to the joint venture/partnership to other parties in fraud of [Aurelio]. In consequence,
[Aurelio] is therefore causing at this time the annotation on the titles of these real properties' a
notice of lis pendens '. (Emphasis in the original; underscoring and words in bracket added.)

For ease of reference, Annex 'A-1 of the complaint, which petitioner asserts to have been meant for
him by his brother Eduardo, pertinently reads:

10) JR. (AKL) [Referring to petitioner Aurelio K. Litonjua]:

You have now your own life to live after having been married. '.

I am trying my best to mold you the way I work so you can follow the pattern '. You will be the only
one left with the company, among us brothers and I will ask you to stay as I want you to run this
office every time I am away. I want you to run it the way I am trying to run it because I will be all
alone and I will depend entirely to you (sic). My sons will not be ready to help me yet until about
maybe 15/20 years from now. Whatever is left in the corporation, I will make sure that you get ONE
MILLION PESOS (P1,000,000.00) or ten percent (10%) equity, whichever is greater. We two will
gamble the whole thing of what I have and what you are entitled to. '. It will be you and me alone on
this. If ever I pass away, I want you to take care of all of this. You keep my share for my two sons
are ready take over but give them the chance to run the company which I have built.

'xxx ' xxx xxx

Because you will need a place to stay, I will arrange to give you first ONE HUNDRED
THOUSANDS PESOS: (P100, 000.00) in cash or asset, like Lt. Artiaga so you can live better there.
The rest I will give you in form of stocks which you can keep. This stock I assure you is good and
saleable. I will also gladly give you the share of Wack-Wack 'and Valley Golf ' because you have
been good. The rest will be in stocks from all the corporations which I repeat, ten percent (10%)
equity. [6]

On December 20, 2002, Eduardo and the corporate respondents, as defendants a quo, filed a
joint ANSWER With Compulsory Counterclaim denying under oath the material allegations of the
complaint, more particularly that portion thereof depicting petitioner and Eduardo as having entered
into a contract of partnership. As affirmative defenses, Eduardo, et al., apart from raising a
jurisdictional matter, alleged that the complaint states no cause of action, since no cause of action
may be derived from the actionable document, i.e., Annex ' A-1', being void under the terms of
Article 1767 in relation to Article 1773 of the Civil Code, infra. It is further alleged that whatever
undertaking Eduardo agreed to do, if any, under Annex ' A-1',are unenforceable under the provisions
of the Statute of Frauds. [7]

For his part, Yang - who was served with summons long after the other defendants submitted their answer ' moved
to dismiss on the ground, inter alia, that, as to him, petitioner has no cause of action and the complaint does not
state any. [8] Petitioner opposed this motion to dismiss.
On January 10, 2003, Eduardo, et al., filed a Motion to Resolve Affirmative Defenses. [9] To this motion, petitioner
interposed an Opposition with ex-Parte Motion to Set the Case for Pre-trial. [10] Acting on the separate motions
immediately adverted to above, the trial court, in an Omnibus Order dated March 5, 2003, denied the affirmative
defenses and, except for Yang, set the case for pre-trial on April 10, 2003. [11] In another Omnibus Order of April
2, 2003, the same court denied the motion of Eduardo, et al., for reconsideration [12] and Yang's motion to
dismiss. The following then transpired insofar as Yang is concerned:

1. On April 14, 2003, Yang filed his ANSWER, but expressly reserved the right to seek reconsideration of the April
2, 2003 Omnibus Order and to pursue his failed motion to dismiss [13] to its full resolution.

2. On April 24, 2003, he moved for reconsideration of the Omnibus Order of April 2, 2003, but his motion was
denied in an Order of July 4, 2003.[14]

3. On August 26, 2003, Yang went to the Court of Appeals (CA) in a petition for certiorari under Rule 65 of the
Rules of Court, docketed as CA-G.R. SP No. 78774, [15] to nullify the separate orders of the trial court, the first
denying his motion to dismiss the basic complaint and, the second, denying his motion for reconsideration.

Earlier, Eduardo and the corporate defendants, on the contention that grave abuse of discretion and injudicious
haste attended the issuance of the trial court's aforementioned Omnibus Orders dated March 5, and April 2, 2003,
sought relief from the CA via similar recourse. Their petition for certiorari was docketed as CA G.R. SP No.
76987 . 'Per its resolution dated October 2, 2003, [16] the CA's 14th Division ordered the consolidation of CA G.R.
SP No. 78774 with CA G.R. SP No. 76987.

Following the submission by the parties of their respective Memoranda of Authorities, the appellate court came out
with the herein assailed Decision dated March 31, 2004, finding for Eduardo and Yang, as lead petitioners therein,
disposing as follows:

WHEREFORE, judgment is hereby rendered granting the issuance of the writ of certiorari in these
consolidated cases annulling, reversing and setting aside the assailed orders of the court a quo dated
March 5, 2003, April 2, 2003 and July 4, 2003 and the complaint filed by private respondent [now
petitioner Aurelio] against all the petitioners [now herein respondents Eduardo, et al.] with the
court a quo is hereby dismissed .
SO ORDERED. [17] (Emphasis in the original; words in bracket added.)

Explaining its case disposition, the appellate court stated, inter alia, that the alleged partnership, as
evidenced by the actionable documents, Annex ' A and ' A-1 attached to the complaint, and upon
which petitioner solely predicates his right/s allegedly violated by Eduardo, Yang and the corporate
defendants a quo is 'void or legally inexistent.

In time, petitioner moved for reconsideration but his motion was denied by the CA in its equally
assailed Resolution of December 7, 2004. [18] .

Hence, petitioner's present recourse, on the contention that the CA erred:

A. When it ruled that there was no partnership created by the actionable document because this was not a public
instrument and immovable properties were contributed to the partnership.

B. When it ruled that the actionable document did not create a demandable right in favor of
petitioner.

C. When it ruled that the complaint stated no cause of action against [respondent] Robert Yang; and

D. When it ruled that petitioner has changed his theory on appeal when all that Petitioner had done
was to support his pleaded cause of action by another legal perspective/argument.

The petition lacks merit.

 Petitioner's demand, as defined in the petitory portion of his complaint in the trial court, is for delivery or
payment to him, as Eduardo's and Yang's partner, of his partnership/joint venture share, after an accounting has
been duly conducted of what he deems to be partnership/joint venture property. [19]

A partnership exists when two or more persons agree to place their money, effects, labor, and skill in lawful
commerce or business, with the understanding that there shall be a proportionate sharing of the profits and losses
between them. [20] A contract of partnership is defined by the Civil Code as one where two or more persons
bound themselves to contribute money, property, or industry to a common fund with the intention of dividing the
profits among themselves. [21] A joint venture, on the other hand, 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. [22]

The underlying issue that necessarily comes to mind in this proceedings is whether or not petitioner and
respondent Eduardo are partners in the theatre, shipping and realty business, as one claims but which the other
denies. And the issue bearing on the first assigned error relates to the question of what legal provision is
applicable under the premises, petitioner seeking, as it were, to enforce the actionable document - Annex ' A-1 -
which he depicts in his complaint to be the contract of partnership/joint venture between himself and Eduardo.
Clearly, then, a look at the legal provisions determinative of the existence, or defining the formal requisites, of a
partnership is indicated. Foremost of these are the following provisions of the Civil Code:

Art. 1771. 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.

Art. 1772. Every contract of partnership having a capital of three thousand pesos or more, in money
or property, shall appear in a public instrument, which must be recorded in the Office of the
Securities and Exchange Commission.

Failure to comply with the requirement of the preceding paragraph shall not affect the liability of the
partnership and the members thereof to third persons.

Art. 1773. A contract of partnership is void, whenever immovable property is contributed thereto, if
an inventory of said property is not made, signed by the parties, and attached to the public
instrument.

Annex ' A-1 ', on its face, contains typewritten entries, personal in tone, but is unsigned and
undated. As an unsigned document, there can be no quibbling that Annex ' A-1 does not meet the
public instrumentation requirements exacted under Article 1771 of the Civil Code. Moreover, being
unsigned and doubtless referring to a partnership involving more than P3,000.00 in money or
property, Annex ' A-1 cannot be presented for notarization, let alone registered with the Securities
and Exchange Commission (SEC), as called for under the Article 1772 of the Code. 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, the next logical point of inquiry turns on
the nature of petitioner's contribution, if any, to the supposed partnership

The CA, addressing the foregoing query, correctly stated that petitioner's contribution consisted of immovables and
real rights. Wrote that court:

A further examination of the allegations in the complaint would show that [petitioner's ] contribution to the so-
called 'partnership/joint venture was his supposed share in the family business that is consisting of movie theaters,
shipping and land development under paragraph 3.02 of the complaint. In other words, his contribution as a partner
in the alleged partnership/joint venture consisted of immovable properties and real rights. '. [23]

Significantly enough, petitioner matter-of-factly concurred with the appellate court's observation
that, prescinding from what he himself alleged in his basic complaint, his contribution to the
partnership consisted of his share in the Litonjua family businesses which owned variable
immovable properties. Petitioner's assertion in his motion for reconsideration[24] of the CA's
decision, that 'what was to be contributed to the business [of the partnership] was [petitioner's ]
industry and his share in the family [theatre and land development] business' leaves no room for
speculation as to what petitioner contributed to the perceived partnership.
 Lest it be overlooked, the contract-validating inventory requirement under Article 1773 of the Civil Code applies
as long real property or real rights are initially brought into the partnership. In short, it is really of no moment
which of the partners, or, in this case, who between petitioner and his brother Eduardo, contributed immovables. In
context, the more important consideration is that real property was contributed, in which case an inventory of the
contributed property duly signed by the parties should be attached to the public instrument, else there is legally no
partnership to speak of.

Petitioner, in an obvious bid to evade the application of Article 1773, argues that the immovables in question were
not contributed, but were acquired after the formation of the supposed partnership. Needless to stress, the Court
cannot accord cogency to this specious argument. For, as earlier stated, petitioner himself admitted contributing his
share in the supposed shipping, movie theatres and realty development family businesses which already owned
immovables even before Annex ' A-1 was allegedly executed.

Considering thus the value and nature of petitioner's alleged contribution to the purported partnership, the Court,
even if so disposed, cannot plausibly extend Annex ' A-1 the legal effects that petitioner so desires and pleads to be
given. Annex ' A-1 , in fine, cannot support the existence of the partnership sued upon and sought to be enforced.
The legal and factual milieu of the case calls for this disposition. A partnership may be constituted in any form,
save when immovable property or real rights are contributed thereto or when the partnership has a capital of at
least P3,000.00, in which case a public instrument shall be necessary. [25]And if only to stress what has repeatedly
been articulated, 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 it.

Given the foregoing perspective, what the appellate court wrote in its assailed Decision [26]about the probative
value and legal effect of Annex ' A-1 commends itself for concurrence:

Considering that the allegations in the complaint showed that [petitioner] contributed immovable properties to the
alleged partnership, the 'Memorandum (Annex 'A of the complaint) which purports to establish the said
'partnership/joint venture is NOT a public instrument and there was NO inventory of the immovable property duly
signed by the parties. As such, the said 'Memorandum ' is null and void for purposes of establishing the existence
of a valid contract of partnership. Indeed, because of the failure to comply with the essential formalities of a valid
contract, the purported 'partnership/joint venture is legally inexistent and it produces no effect whatsoever.
Necessarily, a void or legally inexistent contract cannot be the source of any contractual or legal right.
Accordingly, the allegations in the complaint, including the actionable document attached thereto, clearly
demonstrates that [petitioner] has NO valid contractual or legal right which could be violated by the [individual
respondents] herein. As a consequence, [petitioner's ] complaint does NOT state a valid cause of action because
NOT all the essential elements of a cause of action are present. (Underscoring and words in bracket added.)

Likewise well-taken are the following complementary excerpts from the CA's equally assailed Resolution of
December 7, 2004 [27] denying petitioner's motion for reconsideration:

urther, We conclude that despite glaring defects in the allegations in the complaint as well as the actionable
document attached thereto (Rollo, p. 191), the [trial] court did not appreciate and apply the legal provisions
which were brought to its attention by herein [respondents] in the their pleadings. In our evaluation of
[petitioner's ] complaint, the latter alleged inter alia to have contributed immovable properties to the
alleged partnership but the actionable document is not a public document and there was no inventory of
immovable properties signed by the parties. Both the allegations in the complaint and the actionable
documents considered, it is crystal clear that [petitioner] has no valid or legal right which could be violated
by [respondents]. (Words in bracket added.)

Under the second assigned error, it is petitioner's posture that Annex ' A-1 ', assuming its inefficacy or nullity as a
partnership document, nevertheless created demandable rights in his favor. As petitioner succinctly puts it in this
petition:

3. Contrariwise, this actionable document, especially its above-quoted provisions, established an actionable
contract even though it may not be a partnership. This actionable contract is what is known as an
innominate contract (Civil Code, Article 1307).

4. It may not be a contract of loan, or a mortgage or whatever, but surely the contract does create rights and
obligations of the parties and which rights and obligations may be enforceable and demandable. Just
 because the relationship created by the agreement cannot be specifically labeled or pigeonholed into a
category of nominate contract does not mean it is void or unenforceable.

Petitioner has thus thrusted the notion of an innominate contract on this' Court - and earlier on the CA after he
experienced a reversal of fortune thereat - as an afterthought. The appellate court, however, cannot really be faulted
for not yielding to petitioner's dubious stratagem of altering his theory of joint venture/partnership to an innominate
contract. For, at bottom, the appellate court's certiorari jurisdiction was circumscribed by what was alleged to have
been the order/s issued by the trial court in grave abuse of discretion. As respondent Yang pointedly
observed, [28] since the parties' basic position had been well-defined, that of petitioner being that the actionable
document established a partnership/joint venture, it is on those positions that the appellate court exercised its
certiorari jurisdiction. Petitioner's act of changing his original theory is an impermissible practice and constitutes,
as the CA aptly declared, an admission of the untenability of such theory in the first place.

[Petitioner] is now humming a different tune . . . . In a sudden twist of stance, he has now contended that
the actionable instrument may be considered an innominate contract . xxx Verily, this now changes
[petitioner's ] theory of the case which is not only prohibited by the Rules but also is an implied
admission that the very theory he himself ' has adopted, filed and prosecuted before the respondent
court is erroneous.

Be that as it may . '. We hold that this new theory contravenes [petitioner's ] theory of the actionable
document being a partnership document. If anything, it is so obvious we do have to test the
sufficiency of the cause of action on the basis of partnership law xxx. [29] (Emphasis in the original;
Words in bracket added).

But even assuming in gratia argumenti that Annex ' A-1 partakes of a perfected innominate contract, petitioner's
complaint would still be dismissible as against Eduardo and, more so, against Yang. It cannot be over-emphasized
that petitioner points to Eduardo as the author of Annex ' A-1 . Withal, even on this consideration alone, petitioner's
claim against Yang is doomed from the very start.

'As it were, the only portion of Annex ' A-1 which could perhaps be remotely regarded as vesting petitioner with a
right to demand from respondent Eduardo the observance of a determinate conduct, reads:

You will be the only one left with the company, among us brothers and I will ask you to stay as I want you to
run this office everytime I am away. I want you to run it the way I am trying to run it because I will be
alone and I will depend entirely to you, My sons will not be ready to help me yet until about maybe 15/20
years from now. Whatever is left in the corporation, I will make sure that you get ONE MILLION PESOS
(P1,000,000.00) or ten percent (10%) equity, whichever is greater. (Underscoring added)

is at once apparent that what respondent Eduardo imposed upon himself under the above passage, if he indeed wrote
Annex ' A-1 ', is a promise which is not to be performed within one year from 'contract execution on June 22, 1973.
Accordingly, the agreement embodied in Annex ' A-1 is covered by the Statute of Frauds and ergo unenforceable
for non-compliance therewith. [30] By force of the statute of frauds, an agreement that by its terms is not to be
performed within a year from the making thereof shall be unenforceable by action, unless the same, or some note
or memorandum thereof, be in writing and subscribed by the party charged. Corollarily, no action can be proved
unless the requirement exacted by the statute of frauds is complied with. [31] est it be overlooked, petitioner is the
intended beneficiary of the P1 Million or 10% equity of the family businesses supposedly promised by Eduardo to
give in the near future. Any suggestion that the stated amount or the equity component of the promise was intended
to go to a common fund would be to read something not written in Annex ' A-1 . Thus, even this angle alone argues
against the very idea of a partnership, the creation of which requires two or more contracting minds mutually
agreeing to contribute money, property or industry to a common fund with the intention of dividing the profits
between or among themselves. [32]

In sum then, the Court rules, as did the CA, that petitioner's complaint for specific performance anchored on an
actionable document of partnership which is legally inexistent or void or, at best, unenforceable does not state a
cause of action as against respondent Eduardo and the corporate defendants. And if no of action can successfully
be maintained against respondent Eduardo because no valid partnership existed between him and petitioner, the
Court cannot see its way clear on how the same action could plausibly prosper against Yang. Surely, Yang could
not have become a partner in, or could not have had any form of business relationship with, an inexistent
partnership.

As may be noted, petitioner has not, in his complaint, provide the logical nexus that would tie Yang to him as his
partner. In fact, attendant circumstances would indicate the contrary. Consider:

'1. Petitioner asserted in his complaint that his so-called joint venture/partnership with Eduardo was 'for the
continuation of their family business and common family funds which were theretofore being mainly managed by
Eduardo. [33] But Yang denies kinship with the Litonjua family and petitioner has not disputed the disclaimer.

2. In some detail, petitioner mentioned what he had contributed to the joint venture/partnership with Eduardo and
what his share in the businesses will be. No allegation is made whatsoever about what Yang contributed, if any, let
alone his proportional share in the profits. But such allegation cannot, however, be made because, as aptly
observed by the CA, the actionable document did not contain such provision, let alone mention the name of Yang.
How, indeed, could a person be considered a partner when the document purporting to establish the partnership
contract did not even mention his name.

3. Petitioner states' in par. 2.01 of the complaint that '[he] and Eduardo are business partners in the [respondent]
corporations, while 'Bobby is his and Eduardo's partner in their Odeon Theater investment (par. 2.03). This means
that the partnership between petitioner and Eduardo came first; Yang became their partner in their Odeon Theater
investment thereafter. Several paragraphs later, however, petitioner would contradict himself by alleging that his
'investment and that of Eduardo and Yang in the Odeon theater business has expanded through a reinvestment of
profit income and direct investments in several corporation including but not limited to [six] corporate respondents'
This simply means that the 'Odeon Theatre business' came before the corporate respondents. Significantly enough,
petitioner refers to the corporate respondents as 'progeny of the Odeon Theatre business. [34]

Needless to stress, petitioner has not sufficiently established in his complaint the legalvinculum whence he sourced
his right to drag Yang into the fray. The Court of Appeals, in its assailed decision, captured and formulated the
legal situation in the following wise:

[Respondent] Yang, ' is impleaded because, as alleged in the complaint, he is a 'partner of [Eduardo] and
the [petitioner] in the Odeon Theater Investment which expanded through reinvestments of profits and
direct investments in several corporations, thus:

Clearly, [petitioner's ] claim against ' Yang arose from his alleged partnership with petitioner and the
'respondent. However, there was NO allegation in the complaint which directly alleged how the supposed
contractual relation was created between [petitioner] and 'Yang. More importantly, however, the foregoing
ruling of this Court that the purported partnership between [Eduardo] is void and legally inexistent directly
affects said claim against 'Yang. Since [petitioner] is trying to establish his claim against ' Yang by linking
him to the legally inexistent partnership . . . such attempt had become futile because there was NOTHING
that would contractually connect [petitioner] and ' Yang. To establish a valid cause of action, the complaint
should have a statement of fact upon which to connect [respondent] Yang to the alleged partnership
between [petitioner] and respondent [Eduardo], including their alleged investment in the Odeon Theater. A
statement of facts on those matters is pivotal to the complaint as they would constitute the ultimate facts
necessary to establish the elements of a cause of action against ' Yang. [35] Pressing its point, the CA later
stated in its resolution denying petitioner's motion for reconsideration the following:

xxx Whatever the complaint calls it, it is the actionable document attached to the complaint that is
controlling. Suffice it to state, We have not ignored the actionable document ' As a matter of fact, We
emphasized in our decision ' that insofar as [Yang] is concerned, he is not even mentioned in the said
actionable document. We are therefore puzzled how a person not mentioned in a document purporting to
establish a partnership could be considered a partner.[36] (Words in bracket ours).

The last issue raised by petitioner, referring to whether or not he changed his theory of the case, as
peremptorily determined by the CA, has been discussed at length earlier and need not detain us long.
Suffice it to say that after the CA has ruled that the alleged partnership is inexistent, petitioner took a
different tack. Thus, from a joint venture/partnership theory which he adopted and consistently pursued in
his complaint, petitioner embraced the innominate contract theory. Illustrative of this shift is petitioner's
statement in par. #8 of his motion for reconsideration of the CA's decision combined with what he said in
par. # 43 of this petition, as follows:

8. Whether or not the actionable document creates a partnership, joint venture, or whatever, is a legal
matter. What is determinative for purposes of sufficiency of the complainant's allegations, is whether the
actionable document bears out an actionable contract ' be it a partnership, a joint venture or whatever or
some innominate contract ' It may be noted that one kind of innominate contract is what is known as du ut
facias (I give that you may do). [37]

43. Contrariwise, this actionable document, especially its above-quoted provisions, established an
actionable contract even though it may not be a partnership. This actionable contract is what is known as an
innominate contract (Civil Code, Article 1307). [38] Springing surprises on the opposing party is offensive
to the sporting idea of fair play, justice and due process; hence, the proscription against a party shifting
from one theory at the trial court to a new and different theory in the appellate court. [39] On the same
rationale, an issue which was neither averred in the complaint cannot be raised for the first time on
appeal. [40] It is not difficult, therefore, to agree with the CA when it made short shrift of petitioner's
innominate contract theory on the basis of the foregoing basic reasons.

Petitioner's protestation that his act of introducing the concept of innominate contract was not a case of changing
theories but of supporting his pleaded cause of action ' that of the existence of a partnership - by another legal
perspective/argument, strikes the Court as a strained attempt to rationalize an untenable position. Paragraph 12 of
his motion for reconsideration of the CA's decision virtually relegates partnership as a fall-back theory. Two
paragraphs later, in the same notion, petitioner faults the appellate court for reading, with myopic eyes, the
actionable document solely as establishing a partnership/joint venture. Verily, the cited paragraphs are a study of a
party hedging on whether or not to pursue theoriginal cause of action or altogether abandoning the same, thus:

12. Incidentally, assuming that the actionable document created a partnership between [respondent]
Eduardo, Sr. and [petitioner], no immovables were contributed to this partnership. xxx

14. All told, the Decision takes off from a false premise that the actionable document attached to the
complaint does not establish a contractual relationship between [petitioner] and ' Eduardo, Sr. and Roberto
T Yang simply because his document does not create a partnership or a joint venture. This is ' a myopic
reading of the actionable document.

Per the Court's own count, petitioner used in his complaint the mixed words 'joint venture/partnership nineteen
(19) times and the term 'partner four (4) times. He made reference to the 'law of joint venture/partnership [being
applicable] to the business relationship ' between [him], Eduardo and Bobby [Yang] and to his 'rights in all
specific properties' of their joint venture/partnership. Given this consideration, petitioner's right of action against
respondents Eduardo and Yang doubtless pivots on the existence of the partnership between the three of them, as
purportedly evidenced by the undated and unsigned Annex 'A-1 . A void Annex 'A-1', as' an actionable document
of partnership, would strip petitioner of a cause of action under the premises. 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 of action. So, in gist, said the Court of Appeals. The Court agrees.

WHEREFORE , the instant petition is DENIED and the impugned Decision and Resolution of the Court of
Appeals AFFIRMED.

[G.R. No. 136448. November 3, 1999.]

LIM TONG LIM, Petitioner, v. PHILIPPINE FISHING GEAR INDUSTRIES, INC, Respondent.

DECISION
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 it is shown that they have not contributed any capital
of their own to a "common fund." Their contribution may be in the form of credit or industry, not necessarily cash
or fixed assets. Being partners, they are all liable for debts incurred by or on behalf of the partnership. The liability
for a contract entered into on behalf of an unincorporated association or ostensible corporation may lie in a person
who may not have directly transacted on its behalf, but reaped benefits from that
contract.chanroblesvirtuallawlibrary:red

In the Petition for Review on Certiorari before us, Lim Tong Lim assails the November 26, 1998 Decision of the
Court of Appeals in CA-GR CV 41477, 1 which disposed as follows:jgc:chanrobles.com.ph

"WHEREFORE, [there being] no reversible error in the appealed decision, the same is hereby affirmed." 2

The decretal portion of the Quezon City Regional Trial Court (RTC) ruling, which was affirmed by the CA, reads
as follows:j "WHEREFORE, the Court rules:chanrob1es virtual 1aw library
1. That plaintiff is entitled to the writ of preliminary attachment issued by this Court on September 20,
1990;chanrobles virtual lawlibrary

2. That defendants are jointly liable to plaintiff for the following amounts, subject to the modifications as
hereinafter made by reason of the special and unique facts and circumstances and the proceedings that transpired
during the trial of this case;

a. P532,045.00 representing [the] unpaid purchase price of the fishing nets covered by the Agreement plus
P68,000.00 representing the unpaid price of the floats not covered by said Agreement;

b. 12% interest per annum counted from date of plaintiff’s invoices and computed on their respective amounts as
follows:chanrob1es virtual 1aw library

i. Accrued interest of P73,221.00 on Invoice No. 14407 for P385,377.80 dated February 9, 1990;

ii. Accrued interest of P27,904.02 on Invoice No. 14413 for P146,868.00 dated February 13, 1990;

iii. Accrued interest of P12,920.00 on Invoice No. 14426 for P68,000.00 dated February 19, 1990;

c. P50,000.00 as and for attorney’s fees, plus P8,500.00 representing P500.00 per appearance in court;

d. P65,000.00 representing P5,000.00 monthly rental for storage charges on the nets counted from September 20,
1990 (date of attachment) to September 12, 1991 (date of auction sale);chanroblesvirtuallawlibrary

e. Cost of suit.

"With respect to the joint liability of defendants for the principal obligation or for the unpaid price of nets and
floats in the amount of P532,045.00 and P68,000.00, respectively, or for the total amount of P600,045.00, this
Court noted that these items were attached to guarantee any judgment that may be rendered in favor of the plaintiff
but, upon agreement of the parties, and, to avoid further deterioration of the nets during the pendency of this case,
it was ordered sold at public auction for not less than P900,000.00 for which the plaintiff was the sole and winning
bidder. The proceeds of the sale paid for by plaintiff was deposited in court. In effect, the amount of P900,000.00
replaced the attached property as a guaranty for any judgment that plaintiff may be able to secure in this case with
the ownership and possession of the nets and floats awarded and delivered by the sheriff to plaintiff as the highest
bidder in the public auction sale. It has also been noted that ownership of the nets [was] retained by the plaintiff
until full payment [was] made as stipulated in the invoices; hence, in effect, the plaintiff attached its own
properties. It [was] for this reason also that this Court earlier ordered the attachment bond filed by plaintiff to
guaranty damages to defendants to be cancelled and for the P900,000.00 cash bidded and paid for by plaintiff to
serve as its bond in favor of defendants.

"From the foregoing, it would appear therefore that whatever judgment the plaintiff may be entitled to in this case
will have to be satisfied from the amount of P900,000.00 as this amount replaced the attached nets and floats.
Considering, however, that the total judgment obligation as computed above would amount to only P840,216.92, it
would be inequitable, unfair and unjust to award the excess to the defendants who are not entitled to damages and
who did not put up a single centavo to raise the amount of P900,000.00 aside from the fact that they are not the
owners of the nets and floats. For this reason, the defendants are hereby relieved from any and all liabilities arising
from the monetary judgment obligation enumerated above and for plaintiff to retain possession and ownership of
the nets and floats and for the reimbursement of the P900,000.00 deposited by it with the Clerk of Court.

SO ORDERED." 3chanroblesvirtuallawlibrary

The Facts

On behalf of "Ocean Quest Fishing Corporation," Antonio Chua and Peter Yao entered into a Contract dated
February 7, 1990, for the purchase of fishing nets of various sizes from the Philippine Fishing Gear Industries, Inc.
(herein respondent). They claimed that they were engaged in a business venture with Petitioner Lim Tong Lim,
who however was not a signatory to the agreement. The total price of the nets amounted to P532,045. Four hundred
pieces of floats worth P68,000 were also sold to the Corporation. 4

The buyers, however, failed to pay for the fishing nets and the floats; hence, private respondent filed a collection
suit against Chua, Yao and Petitioner Lim Tong Lim with a prayer for a writ of preliminary attachment. 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. 5 On September 20, 1990, the lower court issued a Writ of Preliminary Attachment, which the sheriff
enforced by attaching the fishing nets on board F/B Lourdes which was then docked at the Fisheries Port, Navotas,
Metro Manila.chanrobles law library : red

Instead of answering the Complaint, Chua filed a Manifestation admitting his liability and requesting a reasonable
time within which to pay. He also turned over to respondent some of the nets which were in his possession. Peter
Yao filed an Answer, after which he was deemed to have waived his right to cross-examine witnesses and to
present evidence on his behalf, because of his failure to appear in subsequent hearings. Lim Tong Lim, on the other
hand, filed an Answer with Counterclaim and Crossclaim and moved for the lifting of the Writ of Attachment. 6
The trial court maintained the Writ, and upon motion of private respondent, ordered the sale of the fishing nets at a
public auction. Philippine Fishing Gear Industries won the bidding and deposited with the said court the sales
proceeds of P900,000. 7

On November 18, 1992, the trial court rendered its Decision, ruling that Philippine Fishing Gear Industries was
entitled to the Writ of Attachment and that Chua, Yao and Lim, as general partners, were jointly liable to
pay Respondent. 8

The trial court ruled that a partnership among Lim, Chua and Yao existed based (1) on the testimonies of the
witnesses presented and (2) on a Compromise Agreement executed by the three 9 in Civil Case No. 1492-MN
which Chua and Yao had brought against Lim in the RTC of Malabon, Branch 72, for (a) a declaration of nullity of
commercial documents; (b) a reformation of contracts; (c) a declaration of ownership of fishing boats; (d) an
injunction and (e) damages. 10 The Compromise Agreement provided:chanroblesvirtualawlibrary

"a) That the parties plaintiffs & Lim Tong Lim agree to have the four (4) vessels sold in the amount of
P5,750,000.00 including the fishing net. This P5,750,000.00 shall be applied as full payment for P3,250,000.00 in
favor of JL Holdings Corporation and/or Lim Tong Lim;

"b) If the four (4) vessel[s] and the fishing net will be sold at a higher price than P5,750,000.00 whatever will be
the excess will be divided into 3: 1/3 Lim Tong Lim; 1/3 Antonio Chua; 1/3 Peter Yao;

"c) If the proceeds of the sale the vessels will be less than P5,750,000.00 whatever the deficiency shall be
shouldered and paid to JL Holding Corporation by 1/3 Lim Tong Lim; 1/3 Antonio Chua; 1/3 Peter Yao." 11

The trial court noted that the Compromise Agreement was silent as to the nature of their obligations, but that joint
liability could be presumed from the equal distribution of the profit and loss. 12

Lim appealed to the Court of Appeals (CA) which, as already stated, affirmed the RTC.

Ruling of the Court of Appeals

In affirming the trial court, the CA held that petitioner was a partner of Chua and Yao in a fishing business and
may thus be held liable as such for the fishing nets and floats purchased by and for the use of the partnership. The
appellate court ruled:jgc:chanrobles.com.ph

"The evidence establishes that all the defendants including herein appellant Lim Tong Lim undertook a partnership
for a specific undertaking, that is for commercial fishing . . . . Obviously, the ultimate undertaking of the
defendants was to divide the profits among themselves which is what a partnership essentially is . . . . 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 the profits among themselves (Article 1767, New Civil Code)."
Hence, petitioner brought this recourse before this Court.

The Issues

In his Petition and Memorandum, Lim asks this Court to reverse the assailed Decision on the following
grounds:jgc:chanrobles.com.ph

"I THE COURT OF APPEALS ERRED IN HOLDING, BASED ON A COMPROMISE AGREEMENT THAT CHUA, YAO AND
PETITIONER LIM ENTERED INTO IN A SEPARATE CASE, THAT A PARTNERSHIP AGREEMENT EXISTED AMONG THEM.

"II SINCE IT WAS ONLY CHUA WHO REPRESENTED THAT HE WAS ACTING FOR OCEAN QUEST FISHING
CORPORATION WHEN HE BOUGHT THE NETS FROM PHILIPPINE FISHING, THE COURT OF APPEALS WAS UNJUSTIFIED
IN IMPUTING LIABILITY TO PETITIONER LIM AS WELL.

"III THE TRIAL COURT IMPROPERLY ORDERED THE SEIZURE AND ATTACHMENT OF PETITIONER LIM’S
GOODS."cralaw virtua1aw library

In determining whether petitioner may be held liable for the fishing nets and floats purchased from respondent, the
Court must resolve this key issue: whether by their acts, Lim, Chua and Yao could be deemed to have entered into
a partnership.chanroblesvirtuallawlibra

This Court’s Ruling

The Petition is devoid of merit.

First and Second Issues:chanrob1es virtual 1aw library

Existence of a Partnership and Petitioner’s Liability

In arguing that he should not be held liable for the equipment purchased from respondent, petitioner controverts the
CA finding that a partnership existed between him, Peter Yao and Antonio Chua. He asserts that the CA based its
finding on the Compromise Agreement alone. Furthermore, he disclaims any direct participation in the purchase of
the nets, alleging that the negotiations were conducted by Chua and Yao only, and that he has not even met the
representatives of the respondent company. Petitioner further argues that he was a lessor, not a partner, of Chua
and Yao, for the "Contract of Lease" dated February 1, 1990, showed that he had merely leased to the two the main
asset of the purported partnership — the fishing boat F/B Lourdes. The lease was for six months, with a monthly
rental of P37,500 plus 25 percent of the gross catch of the boat.

We are not persuaded by the arguments of petitioner. The facts as found by the two lower courts clearly showed
that there existed a partnership among Chua, Yao and him, pursuant to Article 1767 of the Civil Code which
provides:jgc:chanrobles.com.ph

"ARTICLE 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 the profits among themselves." chanrobles
lawlibrary : rednad

Specifically, both lower courts ruled that a partnership among the three existed based on the following factual
findings: 15

(1) That Petitioner Lim Tong Lim requested Peter Yao who was engaged in commercial fishing to join him, while
Antonio Chua was already Yao’s partner;

(2) That after convening for a few times, Lim Chua, and Yao verbally agreed to acquire two fishing boats, the FB
Lourdes and the FB Nelson for the sum of P3.35 million;

(3) That they borrowed P3.25 million from Jesus Lim, brother of Petitioner Lim Tong Lim, to finance the venture.

(4) That they bought the boats from CMF Fishing Corporation, which executed a Deed of Sale over these two (2)
boats in favor of Petitioner Lim Tong Lim only to serve as security for the loan extended by Jesus Lim;

(5) That Lim, Chua and Yao agreed that the refurbishing , re-equipping, repairing, dry docking and other expenses
for the boats would be shouldered by Chua and Yao;

(6) That because of the "unavailability of funds," Jesus Lim again extended a loan to the partnership in the amount
of P1 million secured by a check, because of which, Yao and Chua entrusted the ownership papers of two other
boats, Chua’s FB Lady Anne Mel and Yao’s FB Tracy to Lim Tong Lim.chanroblesvirtual|awlibrary

(7) That in pursuance of the business agreement, Peter Yao and Antonio Chua bought nets from Respondent
Philippine Fishing Gear, in behalf of "Ocean Quest Fishing Corporation," their purported business name.

(8) That subsequently, Civil Case No. 1492-MN was filed in the Malabon RTC, Branch 72 by Antonio Chua and
Peter Yao against Lim Tong Lim for (a) declaration of nullity of commercial documents; (b) reformation of
contracts; (c) declaration of ownership of fishing boats; (4) injunction; and (e) damages.

(9) That the case was amicably settled through a Compromise Agreement executed between the parties-litigants the
terms of which are already enumerated above.

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.

Moreover, it is clear that the 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. It would have been inconceivable for Lim to involve himself so much in buying the boat but not in
the acquisition of the aforesaid equipment, without which the business could not have
proceeded.chanroblesvirtual|awlibrary

Given the preceding facts, it is clear that there was, among petitioner, Chua and Yao, a partnership engaged in the
fishing business. They purchased the boats, which constituted the main assets of the partnership, and they agreed
that the proceeds from the sales and operations thereof would be divided among them.

We stress that under Rule 45, a petition for review like the present case should involve only questions of law. Thus,
the foregoing factual findings of the RTC and the CA are binding on this Court, absent any cogent proof that the
present action is embraced by one of the exceptions to the rule. 16 In assailing the factual findings of the two lower
courts, petitioner effectively goes beyond the bounds of a petition for review under Rule 45.

Compromise Agreement Not the Sole Basis of Partnership

Petitioner argues that the appellate court’s sole basis for assuming the existence of a partnership was the
Compromise Agreement. He also claims that the settlement was entered into only to end the dispute among them,
but not to adjudicate their preexisting rights and obligations. His arguments are baseless. The Agreement was but
an embodiment of the relationship extant among the parties prior to its execution.

A proper adjudication of claimants’ rights mandates that courts must review and thoroughly appraise all relevant
facts. Both lower courts have done so and have found, correctly, a preexisting partnership among the parties. In
implying that the lower courts have decided on the basis of one piece of document alone, petitioner fails to
appreciate that the CA and the RTC delved into the history of the document and explored all the possible
consequential combinations in harmony with law, logic and fairness. Verily, the two lower courts’ factual findings
mentioned above nullified petitioner’s argument that the existence of a partnership was based only on the
Compromise Agreement.chanrobles law library

Petitioner Was a Partner, Not a Lessor

We are not convinced by petitioner’s argument that he was merely the lessor of the boats to Chua and Yao, not a
partner in the fishing venture. His argument allegedly finds support in the Contract of Lease and the registration
papers showing that he was the owner of the boats, including F/B Lourdes where the nets were found.

His allegation defies logic. In effect, he would like this Court to believe that he consented to the sale of his own
boats to pay a debt of Chua and Yao, with the excess of the proceeds to be divided among the three of them. No
lessor would do what petitioner did. Indeed, his consent to the sale proved that there was a preexisting partnership
among all three.

Verily, as found by the lower courts, petitioner entered into a business agreement with Chua and Yao, in which
debts were undertaken in order to finance the acquisition and the upgrading of the vessels which would be used in
their fishing business. 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.chanrobles.com.ph : virtual law library

We stress that it is unreasonable — indeed, it is absurd — for petitioner to sell his property to pay a debt he did not
incur, if the relationship among the three of them was merely that of lessor-lessee, instead of partners.

Corporation by Estoppel

Petitioner argues that under the doctrine of corporation by estoppel, liability can be imputed only to Chua and Yao,
and not to him. Again, we disagree.

Section 21 of the Corporation Code of the Philippines provides:jgc:chanrobles.com.ph

"SECTION 21. Corporation by estoppel. — All persons who assume to act as a corporation knowing it to be
without authority to do so shall be liable as general partners for all debts, liabilities and damages incurred or arising
as a result thereof: Provided however, That when any such ostensible corporation is sued on any transaction
entered by it as a corporation or on any tort committed by it as such, it shall not be allowed to use as a defense its
lack of corporate personality.

"One who assumes an obligation to an ostensible corporation as such, cannot resist performance thereof on the
ground that there was in fact no corporation." chanrobles.com:cralaw:red

Thus, even if the ostensible corporate entity is proven to be legally nonexistent, a party may be estopped from
denying its corporate existence. "The reason behind this doctrine is obvious — an unincorporated association has
no personality and would be incompetent to act and appropriate for itself the power and attributes of a corporation
as provided by law; it cannot create agents or confer authority on another to act in its behalf; thus, those who act or
purport to act as its representatives or agents do so without authority and at their own risk. And as it is an
elementary principle of law that a person who acts as an agent without authority or without a principal is himself
regarded as the principal, possessed of all the right and subject to all the liabilities of a principal, a person acting or
purporting to act on behalf of a corporation which has no valid existence assumes such privileges and obligations
and becomes personally liable for contracts entered into or for other acts performed as such agent." 17

The doctrine of corporation by estoppel may apply to the alleged corporation and to a third party. In the first
instance, an unincorporated association, which represented itself to be a corporation, will be estopped from denying
its corporate capacity in a suit against it by a third person who relied in good faith on such representation. It cannot
allege lack of personality to be sued to evade its responsibility for a contract it entered into and by virtue of which
it received advantages and benefits.

On the other hand, a third party who, knowing an association to be unincorporated, nonetheless treated it as a
corporation and received benefits from it, may be barred from denying its corporate existence in a suit brought
against the alleged corporation. In such case, all those who benefited from the transaction made by the ostensible
corporation, despite knowledge of its legal defects, may be held liable for contracts they impliedly assented to or
took advantage of.chanrobles virtual lawlibrary

There is no dispute that the respondent, Philippine Fishing Gear Industries, is entitled to be paid for the nets it sold.
The only question here is whether petitioner should be held jointly 18 liable with Chua and Yao. Petitioner contests
such liability, insisting that only those who dealt in the name of the ostensible corporation should be held liable.
Since his name does not appear on any of the contracts and since he never directly transacted with the respondent
corporation, ergo, he cannot be held liable.

Unquestionably, petitioner benefited from the use of the nets found inside F/B Lourdes, the boat which has earlier
been proven to be an asset of the partnership. He in fact questions the attachment of the nets, because the Writ has
effectively stopped his use of the fishing vessel.

It is difficult to disagree with the RTC and the CA that Lim, Chua and Yao decided to form a corporation.
Although it was never legally formed for unknown reasons, this fact alone does not preclude the liabilities of the
three as contracting parties in representation of it. Clearly, under the law on estoppel, those acting on behalf of a
corporation and those benefited by it, knowing it to be without valid existence, are held liable as general partners.

Technically, it is true that petitioner did not directly act on behalf of the corporation. However, having reaped the
benefits of the contract entered into by persons with whom he previously had an existing relationship, he is deemed
to be part of said association and is covered by the scope of the doctrine of corporation by estoppel. We reiterate
the ruling of the Court in Alonso v. Villamor: 19chanrobles.com.ph : virtual law library

"A litigation is not a game of technicalities in which one, more deeply schooled and skilled in the subtle art of
movement and position, entraps and destroys the other. It is, rather, a contest in which each contending party fully
and fairly lays before the court the facts in issue and then, brushing aside as wholly trivial and indecisive all
imperfections of form and technicalities of procedure, asks that justice be done upon the merits. Lawsuits, unlike
duels, are not to be won by a rapier’s thrust. Technicality, when it deserts its proper office as an aid to justice and
becomes its great hindrance and chief enemy, deserves scant consideration from courts. There should be no vested
rights in technicalities."cralaw virtua1aw library

Third Issue:chanrob1es virtual 1aw library

Validity of Attachment

Finally, petitioner claims that the Writ of Attachment was improperly issued against the nets. We agree with the
Court of Appeals that this issue is now moot and academic. As previously discussed, F/B Lourdes was an asset of
the partnership and that it was placed in the name of petitioner, only to assure payment of the debt he and his
partners owed. The nets and the floats were specifically manufactured and tailor-made according to their own
design, and were bought and used in the fishing venture they agreed upon. Hence, the issuance of the Writ to
assure the payment of the price stipulated in the invoices is proper. Besides, by specific agreement, ownership of
the nets remained with Respondent Philippine Fishing Gear, until full payment thereof.

WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against petitioner.chanrobles
virtual lawlibrary

SO ORDERED.

Melo, Purisima and Gonzaga-Reyes, JJ., concur.

Separate Opinions

VITUG, J., concurring:chanrob1es virtual 1aw library

I share the views expressed in the ponencia of an esteemed colleague, Mr. Justice Artemio V. Panganiban,
particularly the finding that Antonio Chua, Peter Yao and petitioner Lim Tong Lim have incurred the liabilities of
general partners. I merely would wish to elucidate a bit, albeit briefly, the liability of partners in a general
partnership.

When a person by his act or deed represents himself as a partner in an existing partnership or with one or more
persons not actual partners, he is deemed an agent of such persons consenting to such representation and in the
same manner, if he were a partner with respect to persons who rely upon the representation. 1 The association
formed by Chua, Yao and Lim, should be, as it has been deemed, a de facto partnership with all the consequent
obligations for the purpose of enforcing the rights of third persons. The liability of general partners (in a general
partnership as so opposed to a limited partnership) is laid down in Article 1816 2 which posits that all partners shall
be liable pro rata beyond the partnership assets for all the contracts which may have been entered into in its name,
under its signature, and by a person authorized to act for the partnership. This rule is to be construed along with
other provisions of the Civil Code which postulate that the partners can be held solidarily liable with the
partnership specifically in these instances — (1) where, by any wrongful act or omission of any partner acting in
the ordinary course of the business of the partnership or with the authority of his co-partners, loss or injury is
caused to any person, not being a partner in the partnership, or any penalty is incurred, the partnership is liable
therefor to the same extent as the partner so acting or omitting to act; (2) where one partner acting within the scope
of his apparent authority receives money or property of a third person and misapplies it; and (3) where the
partnership in the course of its business receives money or property of a third person and the money or property so
received is misapplied by any partner while it is in the custody of the partnership 3 — consistently with the rules
on the nature of civil liability in delicts and quasi-delicts.chanrobles law library : red

G.R. No. 172690 March 3, 2010

HEIRS OF JOSE LIM, represented by ELENITO LIM, Petitioners,

vs.
JULIET VILLA LIM, Respondent.

DECISION

NACHURA, J.:

Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Civil Procedure, assailing
the Court of Appeals (CA) Decision2 dated June 29, 2005, which reversed and set aside the decision3 of the
Regional Trial Court (RTC) of Lucena City, dated April 12, 2004.

The facts of the case are as follows:

Petitioners are the heirs of the late Jose Lim (Jose), namely: Jose's widow Cresencia Palad (Cresencia); and their
children Elenito, Evelia, Imelda, Edelyna and Edison, all surnamed Lim (petitioners), represented by Elenito Lim
(Elenito). They filed a Complaint4 for Partition, Accounting and Damages against respondent Juliet Villa Lim
(respondent), widow of the late Elfledo Lim (Elfledo), who was the eldest son of Jose and Cresencia.

Petitioners alleged that Jose was the liaison officer of Interwood Sawmill in Cagsiay, Mauban, Quezon. Sometime
in 1980, Jose, together with his friends Jimmy Yu (Jimmy) and Norberto Uy (Norberto), formed a partnership to
engage in the trucking business. Initially, with a contribution of ₱50,000.00 each, they purchased a truck to be used
in the hauling and transport of lumber of the sawmill. Jose managed the operations of this trucking business until
his death on August 15, 1981. Thereafter, Jose's heirs, including Elfledo, and partners agreed to continue the
business under the management of Elfledo. The shares in the partnership profits and income that formed part of the
estate of Jose were held in trust by Elfledo, with petitioners' authority for Elfledo to use, purchase or acquire
properties using said funds.

Petitioners also alleged that, at that time, Elfledo was a fresh commerce graduate serving as his father’s driver in
the trucking business. He 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. By the time the partnership ceased, it
had nine trucks, which were all registered in Elfledo's name. Petitioners asseverated that it was also through
Elfledo’s management of the partnership that he was able to purchase numerous real properties by using the profits
derived therefrom, all of which were registered in his name and that of respondent. In addition to the nine trucks,
Elfledo also acquired five other motor vehicles.

On May 18, 1995, Elfledo died, leaving respondent as his sole surviving heir. Petitioners claimed that respondent
took over the administration of the aforementioned properties, which belonged to the estate of Jose, without their
consent and approval. Claiming that they are co-owners of the properties, petitioners required respondent to submit
an accounting of all income, profits and rentals received from the estate of Elfledo, and to surrender the
administration thereof. Respondent refused; thus, the filing of this case.

Respondent traversed petitioners' allegations and claimed that Elfledo was himself a partner of Norberto and
Jimmy. Respondent also claimed that per testimony of Cresencia, sometime in 1980, Jose gave Elfledo ₱50,000.00
as the latter's capital in an informal partnership with Jimmy and Norberto. When Elfledo and respondent got
married in 1981, the partnership only had one truck; but through the efforts of Elfledo, the business flourished.
Other than this trucking business, Elfledo, together with respondent, engaged in other business ventures. Thus, they
were able to buy real properties and to put up their own car assembly and repair business. When Norberto was
ambushed and killed on July 16, 1993, the trucking business started to falter. When Elfledo died on May 18, 1995
due to a heart attack, respondent talked to Jimmy and to the heirs of Norberto, as she could no longer run the
business. Jimmy suggested that three out of the nine trucks be given to him as his share, while the other three
trucks be given to the heirs of Norberto. However, Norberto's wife, Paquita Uy, was not interested in the vehicles.
Thus, she sold the same to respondent, who paid for them in installments.

Respondent also alleged that when Jose died in 1981, he left no known assets, and the partnership with Jimmy and
Norberto ceased upon his demise. Respondent also stressed that Jose left no properties that Elfledo could have held
in trust. 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 without any participation or contribution from petitioners or
from Jose. Respondent submitted that these are conjugal partnership properties; and thus, she had the right to
refuse to render an accounting for the income or profits of their own business.

Trial on the merits ensued. On April 12, 2004, the RTC rendered its decision in favor of petitioners, thus:

WHEREFORE, premises considered, judgment is hereby rendered:

1) Ordering the partition of the above-mentioned properties equally between the plaintiffs and heirs of Jose
Lim and the defendant Juliet Villa-Lim; and

2) Ordering the defendant to submit an accounting of all incomes, profits and rentals received by her from
said properties.

SO ORDERED.

Aggrieved, respondent appealed to the CA.

On June 29, 2005, the CA reversed and set aside the RTC's decision, dismissing petitioners' complaint for lack of
merit. Undaunted, petitioners filed their Motion for Reconsideration,5 which the CA, however, denied in its
Resolution6 dated May 8, 2006.

Hence, this Petition, raising the sole question, viz.:

IN THE APPRECIATION BY THE COURT OF THE EVIDENCE SUBMITTED BY THE PARTIES, CAN THE
TESTIMONY OF ONE OF THE PETITIONERS BE GIVEN GREATER WEIGHT THAN THAT BY A
FORMER PARTNER ON THE ISSUE OF THE IDENTITY OF THE OTHER PARTNERS IN THE
PARTNERSHIP?7

In essence, petitioners argue that according to the testimony of Jimmy, the sole surviving partner, Elfledo was not a
partner; and that he and Norberto entered into a partnership with Jose. Thus, the CA erred in not giving that
testimony greater weight than that of Cresencia, who was merely the spouse of Jose and not a party to the
partnership.8

Respondent counters that the issue raised by petitioners is not proper in a petition for review on certiorari under
Rule 45 of the Rules of Civil Procedure, as it would entail the review, evaluation, calibration, and re-weighing of
the factual findings of the CA. Moreover, respondent invokes the rationale of the CA decision that, in light of the
admissions of Cresencia and Edison and the testimony of respondent, the testimony of Jimmy was effectively
refuted; accordingly, the CA's reversal of the RTC's findings was fully justified.9

We resolve first the procedural matter regarding the propriety of the instant Petition.

Verily, the evaluation and calibration of the evidence necessarily involves consideration of factual issues — an
exercise that is not appropriate for a petition for review on certiorari under Rule 45. This rule provides that the
parties may raise only questions of law, because the Supreme Court is not a trier of facts. Generally, we are not
duty-bound to analyze again and weigh the evidence introduced in and considered by the tribunals below.10 When
supported by substantial evidence, the findings of fact of the CA are conclusive and binding on the parties and are
not reviewable by this Court, unless the case falls under any of the following recognized exceptions:

(1) When the conclusion is a finding grounded entirely on speculation, surmises and conjectures;

(2) When the inference made is manifestly mistaken, absurd or impossible;

(3) Where there is a grave abuse of discretion;

 (4) When the judgment is based on a misapprehension of facts;

(5) When the findings of fact are conflicting;

(6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is
contrary to the admissions of both appellant and appellee;

(7) When the findings are contrary to those of the trial court;

(8) When the findings of fact are conclusions without citation of specific evidence on which they are based;

(9) When the facts set forth in the petition as well as in the petitioners' main and reply briefs are not
disputed by the respondents; and

(10) When the findings of fact of the Court of Appeals are premised on the supposed absence of evidence
and contradicted by the evidence on record.11

We note, however, that the findings of fact of the RTC are contrary to those of the CA. Thus, our review of such
findings is warranted.

On the merits of the case, we find that the instant Petition is bereft of merit.

A partnership exists when two or more persons agree to place their money, effects, labor, and skill in lawful
commerce or business, with the understanding that there shall be a proportionate sharing of the profits and losses
among them. A contract of partnership is defined by the Civil Code 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.12

Undoubtedly, the best evidence would have been the contract of partnership or the articles of partnership.
Unfortunately, there is none in this case, because the alleged partnership was never formally organized.
Nonetheless, we are asked to determine who between Jose and Elfledo was the "partner" in the trucking business.

A careful review of the records persuades us to affirm the CA decision. The evidence presented by petitioners falls
short of the quantum of proof required to establish that: (1) Jose was the partner and not Elfledo; and (2) all the
properties acquired by Elfledo and respondent form part of the estate of Jose, having been derived from the alleged
partnership.

Petitioners heavily rely on Jimmy's testimony. But that testimony is just one piece of evidence against respondent.
It must be considered and weighed along with petitioners' other evidence vis-à-vis respondent's contrary evidence.
In civil cases, the party having the burden of proof must establish his case by a preponderance of evidence.
"Preponderance of evidence" is the weight, credit, and value of the aggregate evidence on either side and is usually
considered synonymous with the term "greater weight of the evidence" or "greater weight of the credible
evidence." "Preponderance of evidence" is a phrase that, in the last analysis, means probability of the truth. It is
evidence that is more convincing to the court as worthy of belief than that which is offered in opposition
thereto.13 Rule 133, Section 1 of the Rules of Court provides the guidelines in determining preponderance of
evidence, thus:

SECTION I. Preponderance of evidence, how determined. In civil cases, the party having burden of proof must
establish his case by a preponderance of evidence. In determining where the preponderance or superior weight of
evidence on the issues involved lies, the court may consider all the facts and circumstances of the case, the
witnesses' manner of testifying, their intelligence, their means and opportunity of knowing the facts to which they
are testifying, the nature of the facts to which they testify, the probability or improbability of their testimony, their
interest or want of interest, and also their personal credibility so far as the same may legitimately appear upon the
trial. The court may also consider the number of witnesses, though the preponderance is not necessarily with the
greater number.

At this juncture, our ruling in Heirs of Tan Eng Kee v. Court of Appeals14 is enlightening. Therein, we cited Article
1769 of the Civil Code, which provides:

Art. 1769. In determining whether a partnership exists, these rules shall apply:

(1) Except as provided by Article 1825, persons who are not partners as to each other are not partners as to
third persons;

(2) Co-ownership or co-possession does not of 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;

(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, but no such inference shall be drawn if such profits were received in payment:

(a) As a debt by installments or otherwise;

(b) As wages of an employee or rent to a landlord;

(c) As an annuity to a widow or representative of a deceased partner;

(d) As interest on a loan, though the amount of payment vary with the profits of the business;

(e) As the consideration for the sale of a goodwill of a business or other property by installments or
otherwise.

Applying the legal provision to the facts of this case, the following circumstances tend to prove that Elfledo was
himself the partner of Jimmy and Norberto: 1) Cresencia testified that Jose gave Elfledo ₱50,000.00, as share in the
partnership, on a date that coincided with the payment of the initial capital in the partnership;15 (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;16 (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;17 and (5) none of
the petitioners, as heirs of Jose, the alleged partner, demanded periodic accounting from Elfledo during his lifetime.
As repeatedly stressed in Heirs of Tan Eng Kee,18 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 respondent formed part of the estate of Jose, having been derived from
Jose's alleged partnership with Jimmy and Norberto. They failed to refute respondent's claim that Elfledo and
respondent engaged in other businesses. Edison even admitted that Elfledo also sold Interwood lumber as a
sideline.19 Petitioners could not offer any credible evidence other than their bare assertions. Thus, we apply the
basic rule of evidence that between documentary and oral evidence, the former carries more weight. 20

Finally, we agree with the judicious findings of the CA, to wit:

The above testimonies prove that 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 Elfredo’s 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.1avvphi1

It is notable too that Jose Lim died when the partnership was barely a year old, and the partnership and its business
not only continued but also flourished. If it were true that it was Jose Lim and not Elfledo who was the partner,
then upon his death the partnership should have

been dissolved and its assets liquidated. On the contrary, these were not done but instead its operation continued
under the helm of Elfledo and without any participation from the heirs of Jose Lim.

Whatever properties appellant and her husband had acquired, this was through their own concerted efforts and hard
work. Elfledo did not limit himself to the business of their partnership but engaged in other lines of businesses as
well.

In sum, we find no cogent reason to disturb the findings and the ruling of the CA as they are amply supported by
the law and by the evidence on record.

WHEREFORE, the instant Petition is DENIED. The assailed Court of Appeals Decision dated June 29, 2005 is
AFFIRMED. Costs against petitioners.

SO ORDERED.
 [G.R. No. 143340. August 15, 2001.]

LILIBETH SUNGA-CHAN and CECILIA SUNGA, Petitioners, v. LAMBERTO T. CHUA, Respondent.

DECISION

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court of the Decision 1 of the Court
of Appeals dated January 31, 2000 in the case entitled "Lamberto T. Chua v. Lilibeth Sunga Chan and Cecilia
Sunga" and of the Resolution dated May 23, 2000 denying the motion for reconsideration of herein petitioners
Lilibeth Sunga Chan and Cecilia Sunga (hereafter collectively referred to as petitioners).chanrob1es virtua1 1aw
1ibrary

The pertinent facts of this case are as follows:chanrob1es virtual 1aw library

On June 22, 1992, Lamberto T. Chua (hereafter respondent) filed a complaint against Lilibeth Sunga Chan
(hereafter petitioner Lilibeth) and Cecilia Sunga (hereafter petitioner Cecilia), daughter and wife, respectively of
the deceased Jacinto L. Sunga (hereafter Jacinto), for "Winding Up of Partnership Affairs, Accounting, Appraisal
and Recovery of Shares and Damages with Writ of Preliminary Attachment" with the Regional Trial Court, Branch
11, Sindangan, Zamboanga del Norte.

Respondent alleged that in 1977, he verbally entered into a partnership with Jacinto in the distribution of Shellane
Liquefied Petroleum Gas (LPG) in Manila. For business convenience, respondent and Jacinto allegedly agreed to
register the business name of their partnership, SHELLITE GAS APPLIANCE CENTER (hereafter Shellite),
under the name of Jacinto as a sole proprietorship. Respondent allegedly delivered his initial capital contribution of
P100,000.00 to Jacinto while the latter in turn produced P100,000.00 as his counterpart contribution, with the
intention that the profits would be equally divided between them. The partnership allegedly had Jacinto as
manager, assisted by Josephine Sy (hereafter Josephine), a sister of the wife of respondent, Erlinda Sy. As
compensation, Jacinto would receive a manager’s fee or remuneration of 10% of the gross profit and Josephine
would receive 10% of the net profits, in addition to her wages and other remuneration from the business.

Allegedly, from the time that Shellite opened for business on July 8, 1977, its business operation went quite well
and was profitable. Respondent claimed that he could attest to the success of their business because of the volume
of orders and deliveries of filled Shellane cylinder tanks supplied by Pilipinas Shell Petroleum Corporation. While
Jacinto furnished respondent with the merchandise inventories, balance sheets and net worth of Shellite from 1977
to 1989, respondent however suspected that the amount indicated in these documents were understated and
undervalued by Jacinto and Josephine for their own selfish reasons and for tax avoidance.chanrob1es virtua1 1aw
1ibrary

Upon Jacinto’s death in the later part of 1989, his surviving wife, petitioner Cecilia and particularly his daughter,
petitioner Lilibeth, took over the operations, control, custody, disposition and management of Shellite without
respondent’s consent. Despite respondent’s repeated demands upon petitioners for accounting, inventory, appraisal,
winding up and restitution of his net shares in the partnership, petitioners failed to comply. Petitioner Lilibeth
allegedly continued the operations of Shellite, converting to her own use and advantage its properties.

On March 31, 1991, respondent claimed that after petitioner Lilibeth ran out of alibis and reasons to evade
respondent’s demands, she disbursed out of the partnership funds the amount of P200,000.00 and partially paid the
same to Respondent. Petitioner Lilibeth allegedly informed respondent that the P200,000.00 represented partial
payment of the latter’s share in the partnership, with a promise that the former would make the complete inventory
and winding up of the properties of the business establishment. Despite such commitment, petitioners allegedly
failed to comply with their duty to account, and continued to benefit from the assets and income of Shellite to the
damage and prejudice of Respondent.chanrob1es virtua1 1aw 1ibrary

On December 19, 1992, petitioners filed a Motion to Dismiss on the ground that the Securities and Exchange
Commission (SEC) in Manila, not the Regional Trial Court in Zamboanga del Norte had jurisdiction over the
action. Respondent opposed the motion to dismiss.

On January 12, 1993, the trial court finding the complaint sufficient in form and substance denied the motion to
dismiss.

On January 30, 1993, petitioners filed their Answer with Compulsory Counterclaims, contending that they are not
liable for partnership shares, unreceived income/profits, interests, damages and attorney’s fees, that respondent
does not have a cause of action against them, and that the trial court has no jurisdiction over the nature of the
action, the SEC being the agency that has original and exclusive jurisdiction over the case. As counterclaim,
petitioner sought attorney’s fees and expenses of litigation.

On August 2, 1993, petitioner filed a second Motion to Dismiss this time on the ground that the claim for winding
up of partnership affairs, accounting and recovery of shares in partnership affairs, accounting and recovery of
shares in partnership assets/properties should be dismissed and prosecuted against the estate of deceased Jacinto in
a probate or intestate proceeding.

On August 16, 1993, the trial court denied the second motion to dismiss for lack of merit.chanrob1es virtua1 1aw
1ibrary

On November 26, 1993, petitioners filed their Petition for Certiorari, Prohibition and Mandamus with the Court of
Appeals docketed as CA-G.R. SP No. 32499 questioning the denial of the motion to dismiss.

On November 29, 1993, petitioners filed with the trial court a Motion to Suspend Pre-trial Conference.

On December 13, 1993, the trial court granted the motion to suspend pre-trial conference.

On November 15, 1994, the Court of Appeals denied the petition for lack of merit.

On January 16, 1995, this Court denied the petition for review on certiorari filed by petitioner, "as petitioners
failed to show that a reversible error was committed by the appellate court." 2

On February 20, 1995, entry of judgment was made by the Clerk of Court and the case was remanded to the trial
court on April 26, 1995.chanrob1es virtua1 1aw 1ibrary

On September 25, 1995, the trial court terminated the pre-trial conference and set the hearing of the case on
January 17, 1996. Respondent presented his evidence while petitioners were considered to have waived their right
to present evidence for their failure to attend the scheduled date for reception of evidence despite notice.

On October 7, 1997, the trial court rendered its Decision ruling for Respondent. The dispositive portion of the
Decision reads:jgc:chanrobles.com.ph

"WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants, as
follows:chanrob1es virtual 1aw library

(1) DIRECTING them to render an accounting in acceptable form under accounting procedures and standards of
the properties, assets, income and profits of the Shellite Gas Appliance Center since the time of death of Jacinto L.
Sunga, from whom they continued the business operations including all businesses derived from the Shellite Gas
Appliance Center; submit an inventory, and appraisal of all these properties, assets, income, profits, etc. to the
Court and to plaintiff for approval or disapproval;chanrob1es virtua1 1aw 1ibrary

(2) ORDERING them to return and restitute to the partnership any and all properties, assets, income and profits
they misapplied and converted to their own use and advantage that legally pertain to the plaintiff and account for
the properties mentioned in pars. A and B on pages 4-5 of this petition as basis;

(3) DIRECTING them to restitute and pay to the plaintiff ½ shares and interest of the plaintiff in the partnership of
the listed properties, assets and good will (sic) in schedules A, B and C, on pages 4-5 of the petition;

(4) ORDERING them to pay the plaintiff earned but unreceived income and profits from the partnership from 1988
to May 30, 1992, when the plaintiff learned of the closure of the store the sum of P35,000.00 per month, with legal
rate of interest until fully paid;

(5) ORDERING them to wind up the affairs of the partnership and terminate its business activities pursuant to law,
after delivering to the plaintiff all the ½ interest, shares, participation and equity in the partnership, or the value
thereof in money or money’s worth, if the properties are not physically divisible;chanrob1es virtua1 1aw 1ibrary

(6) FINDING them especially Lilibeth Sunga-Chan guilty of breach of trust and in bad faith and hold them liable
to the plaintiff the sum of P50,000.00 as moral and exemplary damages; and,

(7) DIRECTING them to reimburse and pay the sum of P25,000.00 as attorney’s (sic) and P25,00.00 as litigation
expenses.

NO special pronouncements as to COSTS.

SO ORDERED." 3

On October 28, 1997, petitioners filed a Notice of Appeal with the trial court, appealing the case to the Court of
Appeals.chanrob1es virtua1 1aw 1ibrary

On January 31, 2000, the Court of Appeals dismissed the appeal. The dispositive portion of the Decision
reads:jgc:chanrobles.com.ph
"WHEREFORE, the instant appeal is dismissed. The appealed decision is AFFIRMED in all respects." 4

On May 23, 2000, the Court of Appeals denied the motion for reconsideration filed by petitioner.

Hence, this petition wherein petitioner relies upon the following grounds:jgc:chanrobles.com.ph

"1. The Court of Appeals erred in making a legal conclusion that there existed a partnership between respondent
Lamberto T. Chua and the late Jacinto L. Sunga upon the latter’s invitation and offer and that upon his death the
partnership assets and business were taken over by petitioners.

2. The Court of Appeals erred in making the legal conclusion that laches and/or prescription did not apply in the
instant case.

3. The Court of Appeals erred in making the legal conclusion that there was competent and credible evidence to
warrant the finding of a partnership, and assuming arguendo that indeed there was a partnership, the finding of
highly exaggerated amounts or values in the partnership assets and profits." 5

Petitioners question the correctness of the finding of the trial court and the Court of Appeals that a partnership
existed between respondent and Jacinto from 1977 until Jacinto’s death. In the absence of any written document to
show such partnership between respondent and Jacinto, petitioners argue that these courts were proscribed from
hearing the testimonies of respondent and his witness, Josephine, to prove the alleged partnership three years after
Jacinto’s death. To support this argument, petitioners invoke the "Dead Man’s Statute" or "Survivorship Rule"
under Section 23, Rule 130 of the Rules of Court that provides:jgc:chanrobles.com.ph

"SECTION 23. Disqualification by reason of death or insanity of adverse party. — Parties or assignors of parties to
a case, or persons in whose behalf a case is prosecuted, against an executor or administrator or other representative
of a deceased person, or against a person of unsound mind, upon a claim or demand against the estate of such
deceased person, or against such person of unsound mind, cannot testify as to any matter of fact occurring before
the death of such deceased person or before such person became of unsound mind." chanrob1es virtua1 1aw
1ibrary

Petitioners thus implore this Court to rule that the testimonies of respondent and his alter ego, Josephine, should
not have been admitted to prove certain claims against a deceased person (Jacinto), now represented by petitioners.

We are not persuaded.

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. 6 Hence, based on the intention of the parties, as
gathered from the facts and ascertained from their language and conduct, a verbal contract of partnership may
arise. 7 The essential points that must be proven to show that a partnership was agreed upon are (1) mutual
contribution to a common stock, and (2) a joint interest in the profits. 8 Understandably so, in view of the absence
of a written contract of partnership between respondent and Jacinto, respondent resorted to the introduction of
documentary and testimonial evidence to prove said partnership. The crucial issue to settle then is whether or not
the "Dead Man’s Statute" applies to this case so as to render inadmissible respondent’s testimony and that of his
witness, Josephine.

The "Dead Man’s Statute" provides that if one party to the alleged transaction is precluded from testifying by
death, insanity, or other mental disabilities, the surviving party is not entitled to the undue advantage of giving his
own uncontradicted and unexplained account of the transaction. 9 But before this rule can be successfully invoked
to bar the introduction of testimonial evidence, it is necessary that:jgc:chanrobles.com.ph

"1. The witness is a party or assignor of a party to a case or persons in whose behalf a case is
prosecuted.chanrob1es virtua1 1aw 1ibrary

2. The action is against an executor or administrator or other representative of a deceased person or a person of
unsound mind;

3. The subject-matter of the action is a claim or demand against the estate of such deceased person or against
person of unsound mind;

4. His testimony refers to any matter of fact which occurred before the death of such deceased person or before
such person became of unsound mind." 10

Two reasons forestall the application of the "Dead Man’s Statute" to this case.

First, petitioners filed a compulsory counterclaim 11 against respondent in their answer before the trial court, and
with the filing of their counterclaim, petitioners themselves effectively removed this case from the ambit of the
"Dead Man’s Statute." 12 Well entrenched is the rule that when it is the executor or administrator or
representatives of the estate that sets up the counterclaim, the plaintiff, herein respondent, may testify to
occurrences before the death of the deceased to defeat the counterclaim. 13 Moreover, as defendant in the
counterclaim, respondent is not disqualified from testifying as to matters of fact occurring before the death of the
deceased, said action not having been brought against but by the estate or representatives of the deceased. 14

Second, the testimony of Josephine is not covered by the "Dead Man’s Statute" for the simple reason that she is not
"a party or assignor of a party to a case or persons in whose behalf a case is prosecuted." Records show that
respondent offered the testimony of Josephine to establish the existence of the partnership between respondent and
Jacinto. Petitioners’ insistence that Josephine is the alter ego of respondent does not make her an assignor because
the term "assignor" of a party means "assignor of a cause of action which has arisen, and not the assignor of a right
assigned before any cause of action has arisen." 15 Plainly then, Josephine is merely a witness of respondent, the
latter being the party plaintiff.chanrob1es virtua1 1aw 1ibrary

We are not convinced by petitioners’ allegation that Josephine’s testimony lacks probative value because she was
allegedly coerced by respondent, her brother-in-law, to testify in his favor. Josephine merely declared in court that
she was requested by respondent to testify and that if she were not requested to do so she would not have testified.
We fail to see how we can conclude from this candid admission that Josephine’s testimony is involuntary when she
did not in any way categorically say that she was forced to be a witness of Respondent. Also, the fact that
Josephine is the sister of the wife of respondent does not diminish the value of her testimony since relationship per
se, without more, does not affect the credibility of witnesses. 16

Petitioners’ reliance alone on the "Dead Man’s Statute" to defeat respondent’s claim cannot prevail over the factual
findings of the trial court and the Court of Appeals that a partnership was established between respondent and
Jacinto. Based not only on the testimonial evidence, but the documentary evidence as well, the trial court and the
Court of Appeals considered the evidence for respondent as sufficient to prove the formation of a partnership,
albeit an informal one.

Notably, petitioners did not present any evidence in their favor during trial. By the weight of judicial precedents, a
factual matter like the finding of the existence of a partnership between respondent and Jacinto cannot be inquired
into by this Court on review. 17 This Court can no longer be tasked to go over the proofs presented by the parties
and analyze, assess and weigh them to ascertain if the trial court and the appellate court were correct in according
superior credit to this or that piece of evidence of one party or the other. 18 It must be also pointed out that
petitioners failed to attend the presentation of evidence of Respondent. Petitioners cannot now turn to this Court to
question the admissibility and authenticity of the documentary evidence of respondent when petitioners failed to
object to the admissibility of the evidence at the time that such evidence was offered. 19

With regard to petitioners’ insistence that laches and/or prescription should have extinguished respondent’s claim,
we agree with the trial court and the Court of Appeals that the action for accounting filed by respondent three (3)
years after Jacinto’s death was well within the prescribed period. The Civil Code provides that an action to enforce
an oral contract prescribes in six (6) years 20 while the right to demand an accounting for a partner’s interest as
against the person continuing the business accrues at the date of dissolution, in the absence of any contrary
agreement. 21 Considering that the death of a partner results in the dissolution of the partnership22 , in this case, it
was after Jacinto’s death that respondent as the surviving partner had the right to an account of his interest as
against petitioners. It bears stressing that while Jacinto’s death dissolved the partnership, the dissolution did not
immediately terminate the partnership. The Civil Code 23 expressly provides that upon dissolution, the partnership
continues and its legal personality is retained until the complete winding up of its business, culminating in its
termination. 24

In a desperate bid to cast doubt on the validity of the oral partnership between respondent and Jacinto, petitioners
maintain that said partnership that had an initial capital of P200,000.00 should have been registered with the
Securities and Exchange Commission (SEC) since registration is mandated by the Civil Code. True, Article 1772
of the Civil Code requires that partnerships with a capital of P3,000.00 or more must register with the SEC,
however, this registration requirement is not mandatory. Article 1768 of the Civil Code 25 explicitly provides that
the partnership retains its juridical personality even if it fails to register. The failure to register the contract of
partnership does not invalidate the same as among the partners, so long as the contract has the essential requisites,
because the main purpose of registration is to give notice to third parties, and it can be assumed that the members
themselves knew of the contents of their contract. 26 In the case at bar, non-compliance with this directory
provision of the law will not invalidate the partnership considering that the totality of the evidence proves that
respondent and Jacinto indeed forged the partnership in question.

WHEREFORE, in view of the foregoing, the petition is DENIED and the appealed decision is affirmed.
 FIRST DIVISION

[G.R. No. 174149 : September 08, 2010]

J. TIOSEJO INVESTMENT CORP., PETITIONER, VS. SPOUSES BENJAMIN AND ELEANOR ANG,
RESPONDENTS.

Filed pursuant to Rule 45 of the 1997 Rules of Civil Procedure, the petition for review at bench seeks the reversal
of the Resolutions dated 23 May 2006 and 9 August 2006 issued by the Third Division of the Court of Appeals
(CA) in CA-G.R. SP No. 93841 which, respectively, dismissed the petition for review of petitioner J. Tiosejo
Investment Corp. (JTIC) for having been filed out of time[1] and denied the motion for reconsideration of said
dismissal.[2]

The Facts

On 28 December 1995 petitioner entered into a Joint Venture Agreement (JVA) with Primetown Property Group,
Inc. (PPGI) for the development of a residential condominium project to be known as The Meditelon the former's
9,502 square meter property along Samat St., Highway Hills, Mandaluyong City.[3] With petitioner contributing
the same property to the joint venture and PPGI undertaking to develop the condominium, the JVA provided,
among other terms and conditions, that the developed units shall be shared by the former and the latter at a ratio of
17%-83%, respectively.[4] While both parties were allowed, at their own individual responsibility, to pre-sell the
units pertaining to them,[5] PPGI further undertook to use all proceeds from the pre-selling of its saleable units for
the completion of the Condominium Project." [6]

On 17 June 1996, the Housing and Land Use Regulatory Board (HLURB) issued License to Sell No. 96-06-2854 in
favor of petitioner and PPGI as project owners.[7] By virtue of said license, PPGI executedContract to Sell No.
0212 with Spouses Benjamin and Eleanor Ang on 5 February 1997, over the 35.45-square meter condominium unit
denominated as Unit A-1006, for the agreed contract price of P52,597.88 per square meter or a total
P2,077,334.25.[8] On the same date PPGI and respondents also executed Contract to Sell No. 0214 over the 12.50
square meter parking space identified as Parking Slot No. 0405, for the stipulated consideration of P26,400.00
square meters or a total of P313,500.00.[9]

On 21 July 1999, respondents filed against petitioner and PPGI the complaint for the rescission of the aforesaid
Contracts to Sell docketed before the HLURB as HLURB Case No. REM 072199-10567. Contending that they
were assured by petitioner and PPGI that the subject condominium unit and parking space would be available for
turn-over and occupancy in December 1998, respondents averred, among other matters, that in view of the non-
completion of the project according to said representation, respondents instructed petitioner and PPGI to stop
depositing the post-dated checks they issued and to cancel said Contracts to Sell; and, that despite several
demands, petitioner and PPGI have failed and refused to refund the P611,519.52 they already paid under the
circumstances. Together with the refund of said amount and interests thereon at the rate of 12% per annum,
respondents prayed for the grant of their claims for moral and exemplary damages as well as attorney's fees and the
costs.[10]

Specifically denying the material allegations of the foregoing complaint, PPGI filed its 7 September 1999 answer
alleging that the delay in the completion of the project was attributable to the economic crisis which affected the
country at the time; that the unexpected and unforeseen inflation as well as increase in interest rates and cost of
building materials constitute force majeure and were beyond its control; that aware of its responsibilities, it offered
several alternatives to its buyers like respondents for a transfer of their investment to its other feasible projects and
for the amounts they already paid to be considered as partial payment for the replacement unit/s; and, that the
complaint was prematurely filed in view of the on-going negotiations it is undertaking with its buyers and
prospective joint venture partners. Aside from the dismissal of the complaint, PPGI sought the readjustment of the
contract price and the grant of its counterclaims for attorney's fees and litigation expenses.[11]

Petitioner also specifically denied the material allegations of the complaint in separate answer dated 5 February
2002[12] which it amended on 20 May 2002. Calling attention to the fact that its prestation under the JVA consisted
in contributing the property on which The Meditel was to be constructed, petitioner asseverated that, by the terms
of the JVA, each party was individually responsible for the marketing and sale of the units pertaining to its share;
that not being privy to the Contracts to Sell executed by PPGI and respondents, it did not receive any portion of the
payments made by the latter; and, that without any contributory fault and negligence on its part, PPGI breached its
undertakings under the JVA by failing to complete the condominium project. In addition to the dismissal of the
complaint and the grant of its counterclaims for exemplary damages, attorney's fees, litigation expenses and the
costs, petitioner interposed a cross-claim against PPGI for full reimbursement of any sum it may be adjudged liable
to pay respondents.[13]

Acting on the position papers and draft decisions subsequently submitted by the parties,[14] Housing and Land Use
(HLU) Arbiter Dunstan T. San Vicente went on to render the 30 July 2003 decision declaring the subject Contracts
to Sell cancelled and rescinded on account of the non-completion of the condominium project. On the ground that
the JVA created a partnership liability on their part, petitioner and PPGI, as co-owners of the condominium project,
were ordered to pay: (a) respondents' claim for refund of the P611,519.52 they paid, with interest at the rate of 12%
per annum from 5 February 1997; (b) damages in the sum of P75,000.00; (c) attorney's fees in the sum of
P30,000.00; (d) the costs; and, (e) an administrative fine in the sum of P10,000.00 for violation of Sec. 20 in
relation to Sec. 38 of Presidential Decree No. 957. [15]nbsp; Elevated to the HLURB Board of Commissioners via
the petition for review filed by petitioner,[16] the foregoing decision was modified to grant the latter's cross-claim in
the 14 September 2004 decision rendered by said administrative body's Second Division in HLURB Case No.
REM-A-031007-0240,[17] to wit:

Wherefore, the petition for review of the respondent Corporation is dismissed. However, the decision of the Office
below dated July 30, 2003 is modified, hence, its dispositive portion shall read:

1. Declaring the contracts to sell, both dated February 5, 1997, as cancelled and rescinded, and ordering the
respondents to immediately pay the complainants the following:

a. The amount of P611,519.52, with interest at the legal rate reckoned from February 5, 1997 until
fully paid;
b. Damages of P75,000.00;
c. Attorney's fees equivalent to P30,000.00; and
d. The Cost of suit;

2. Ordering respondents to pay this Office administrative fine of P10,000.00 for violation of Section 20 in
relation to Section 38 of P.D. 957; and

3. Ordering respondent Primetown to reimburse the entire amount which the respondent Corporation will be
constrained to pay the complainants.

So ordered.[18]

With the denial of its motion for reconsideration of the foregoing decision,[19] petitioner filed a Notice of Appeal
dated 28 February 2005 which was docketed before the Office of the President (OP) as O.P. Case No. 05-B-
072.[20] On 3 March 2005, the OP issued an order directing petitioner to submit its appeal memorandum within 15
days from receipt thereof.[21] Acting on the motion therefor filed, the OP also issued another order on the same
date, granting petitioner a period of 15 days from 28 February 2005 or until 15 March 2005 within which to file its
appeal memorandum.[22] In view of petitioner's filing of a second motion for extension dated 15 March 2005,[23] the
OP issued the 18 March 2005 order granting the former an additional 10 days from 15 March 2005 or until 25
March 2005 within which to file its appeal memorandum, "provided no further extension shall be
allowed."[24] Claiming to have received the aforesaid 3 March 2005 order only on 16 March 2005, however,
petitioner filed its 31 March 2005 motion seeking yet another extension of 10 days or until 10 April 2005 within
which to file its appeal memorandum.[25]

On 7 April 2005, respondents filed their opposition to the 31 March 2005 motion for extension of
petitioner[26] which eventually filed its appeal memorandum by registered mail on 11 April 2005 in view of the fact
that 10 April 2005 fell on a Sunday.[27] On 25 October 2005, the OP rendered a decision dismissing petitioner's
appeal on the ground that the latter's appeal memorandum was filed out of time and that the HLURB Board
committed no grave abuse of discretion in rendering the appealed decision.[28] Aggrieved by the denial of its
motion for reconsideration of the foregoing decision in the 3 March 2006 order issued by the OP,[29] petitioner filed
before the CA its 29 March 2006 motion for an extension of 15 days from 31 March 2006 or until 15 April 2006
within which to file its petition for review.[30] Accordingly, a non-extendible period of 15 days to file its petition
for review was granted petitioner in the 31 March 2006 resolution issued by the CA Third Division in CA-G.R, SP
No. 93841.[31]

Maintaining that 15 April 2006 fell on a Saturday and that pressures of work prevented its counsel from finalizing
its petition for review, petitioner filed a motion on 17 April 2006, seeking for an additional time of 10 days or until
27 April 2006 within which to file said pleading.[32] Although petitioner filed by registered mail a motion to admit
its attached petition for review on 19 April 2006,[33] the CA issued the herein assailed 23 May 2006
resolution,[34] disposing of the former's pending motion for extension as well as the petition itself in the following
wise:

We resolve to DENY the second extension motion and rule to DISMISS the petition for being filed late.

Settled is that heavy workload is by no means excusable (Land Bank of the Philippines vs. Natividad, 458 SCRA
441 [2005]). If the failure of the petitioners' counsel to cope up with heavy workload should be considered a valid
justification to sidestep the reglementary period, there would be no end to litigations so long as counsel had not
been sufficiently diligent or experienced (LTS Philippine Corporation vs. Maliwat, 448 SCRA 254, 259-260
[2005], citing Sublay vs. National Labor Relations Commission, 324 SCRA 188 [2000]).
Moreover, lawyers should not assume that their motion for extension or postponement will be granted the length of
time they pray for (Ramos vs. Dajoyag, 378 SCRA 229 [2002]).

SO ORDERED.[35]

Petitioner's motion for reconsideration of the foregoing resolution[36] was denied for lack of merit in the CA's
second assailed 9 August 2006 resolution,[37] hence, this petition.

The Issues

Petitioner seeks the reversal of the assailed resolutions on the following grounds, to wit:

I. THE COURT OF APPEALS ERRED IN DISMISSING THE PETITION ON MERE TECHNICALITY;

II. THE COURT OF APPEALS ERRED IN REFUSING TO RESOLVE THE PETITION ON THE MERITS THEREBY
AFFIRMING THE OFFICE OF THE PRESIDENT'S DECISION (A) DISMISSING JTIC'S APPEAL ON A MERE
TECHNICALITY; (B) AFFIRMING THE HLURB BOARD'S DECISION INSOFAR AS IT FOUND JTIC SOLIDARILY
LIABLE WITH PRIMETOWN TO PAY SPOUSES ANG DAMAGES, ATTORNEY'S FEES AND THE COST OF THE SUIT;
AND (C) AFFIRMING THE HLURB BOARD'S DECISION INSOFAR AS IT FAILED TO AWARD JITC ITS
COUNTERCLAIMS AGAINST SPOUSES ANG.[38]

We find the petition bereft of merit.

While the dismissal of an appeal on purely technical grounds is concededly frowned upon,[39] it bears emphasizing
that the procedural requirements of the rules on appeal are not harmless and trivial technicalities that litigants can
just discard and disregard at will.[40] Neither being a natural right nor a part of due process, the rule is settled that
the right to appeal is merely a statutory privilege which may be exercised only in the manner and in accordance
with the provisions of the law.[41] The perfection of an appeal in the manner and within the period prescribed by
law is, in fact, not only mandatory but jurisdictional.[42] Considering that they are requirements which cannot be
trifled with as mere technicality to suit the interest of a party,[43] failure to perfect an appeal in the prescribed
manner has the effect of rendering the judgment final and executory.[44]

Fealty to the foregoing principles impels us to discount the error petitioner imputes against the CA for denying its
second motion for extension of time for lack of merit and dismissing its petition for review for having been filed
out of time. Acting on the 29 March 2006 motion filed for the purpose, after all, the CA had already granted
petitioner an inextendible period of 15 days from 31 March 2006 or until 15 April 2006 within which to file its
petition for review. Sec. 4, Rule 43 of the 1997 Rules of Civil Procedureprovides as follows:

Sec. 4. Period of appeal. - The appeal shall be taken within fifteen (15) days from notice of the award, judgment,
final order or resolution, or from the date of its last publication, if publication is required by law for its effectivity,
or of the denial of petitioner's motion for new trial or reconsideration duly filed in accordance with the governing
law of the court or agency a quo. Only one (1) motion for reconsideration shall be allowed. Upon proper motion
and payment of the full amount of the docket fee before the expiration of the reglementary period, the Court of
Appeals may grant an additional period of fifteen (15) days only within which to file the petition for review. No
further extension shall be granted except for the most compelling reason and in no case to exceed fifteen (15)
days." (Underscoring supplied)

The record shows that, having been granted the 15-day extension sought in its first motion, petitioner filed a second
motion for extension praying for an additional 10 days from 17 April 2006 within which to file its petition for
review, on the ground that pressures of work and the demands posed by equally important cases prevented its
counsel from finalizing the same. As correctly ruled by the CA, however, heavy workload cannot be considered as
a valid justification to sidestep the reglementary period[45] since to do so would only serve to encourage needless
delays and interminable litigations. Indeed, rules prescribing the time for doing specific acts or for taking certain
proceedings are considered absolutely indispensable to prevent needless delays and to orderly and promptly
discharge judicial business.[46]Corollary to the principle that the allowance or denial of a motion for extension of
time is addressed to the sound discretion of the court,[47] moreover, lawyers cannot expect that their motions for
extension or postponement will be granted[48] as a matter of course.

Although technical rules of procedure are not ends in themselves, they are necessary for an effective and
expeditious administration of justice and cannot, for said reason, be discarded with the mere expediency of
claiming substantial merit.[49] This holds particularly true in the case at bench where, prior to the filing of its
petition for review before the CA, petitioner's appeal before the OP was likewise dismissed in view of its failure to
file its appeal memorandum within the extensions of time it had been granted by said office. After being granted
an initial extension of 15 days to do the same, the records disclose that petitioner was granted by the OP a second
extension of 10 days from 15 March 2005 or until 25 March 2005 within which to file its appeal memorandum, on
the condition that no further extensions shall be allowed. Aside from not heeding said proviso, petitioner had,
consequently, no more time to extend when it filed its 31 March 2005 motion seeking yet another extension of 10
days or until 10 April 2005 within which to file its appeal memorandum.
With the foregoing procedural antecedents, the initial 15-day extension granted by the CA and the injunction under
Sec. 4, Rule 43 of the 1997 Rules of Civil Procedure against further extensions "except for the most compelling
reason", it was clearly inexcusable for petitioner to expediently plead its counsel's heavy workload as ground for
seeking an additional extension of 10 days within which to file its petition for review. To our mind, petitioner
would do well to remember that, rather than the low gate to which parties are unreasonably required to stoop,
procedural rules are designed for the orderly conduct of proceedings and expeditious settlement of cases in the
courts of law. Like all rules, they are required to be followed[50] and utter disregard of the same cannot be
expediently rationalized by harping on the policy of liberal construction[51] which was never intended as an
unfettered license to disregard the letter of the law or, for that matter, a convenient excuse to substitute substantial
compliance for regular adherence thereto. When it comes to compliance with time rules, the Court cannot afford
inexcusable delay.[52]

Even prescinding from the foregoing procedural considerations, we also find that the HLURB Arbiter and Board
correctly held petitioner liable alongside PPGI for respondents' claims and the P10,000.00 administrative fine
imposed pursuant to Section 20 in relation to Section 38 of P.D. 957. By the express terms of the JVA, it appears
that petitioner not only retained ownership of the property pending completion of the condominium project[53] but
had also bound itself to answer liabilities proceeding from contracts entered into by PPGI with third parties. Article
VIII, Section 1 of the JVA distinctly provides as follows:

"Sec. 1. Rescission and damages. Non-performance by either party of its obligations under this Agreement shall be
excused when the same is due to Force Majeure. In such cases, the defaulting party must exercise due diligence to
minimize the breach and to remedy the same at the soonest possible time. In the event that either party defaults or
breaches any of the provisions of this Agreement other than by reason of Force Majeure, the other party shall have
the right to terminate this Agreement by giving notice to the defaulting party, without prejudice to the filing of a
civil case for damages arising from the breach of the defaulting party.

In the event that the Developer shall be rendered unable to complete the Condominium Project, and such failure is
directly and solely attributable to the Developer, the Owner shall send written notice to the Developer to cause the
completion of the Condominium Project. If the developer fails to comply within One Hundred Eighty (180) days
from such notice or, within such time, indicates its incapacity to complete the Project, the Owner shall have the
right to take over the construction and cause the completion thereof. If the Owner exercises its right to complete
the Condominium Project under these circumstances, this Agreement shall be automatically rescinded upon written
notice to the Developer and the latter shall hold the former free and harmless from any and all liabilities to third
persons arising from such rescission. In any case, the Owner shall respect and strictly comply with any covenant
entered into by the Developer and third parties with respect to any of its units in the Condominium Project. To
enable the owner to comply with this contingent liability, the Developer shall furnish the Owner with a copy of its
contracts with the said buyers on a month-to-month basis. Finally, in case the Owner would be constrained to
assume the obligations of the Developer to its own buyers, the Developer shall lose its right to ask for indemnity
for whatever it may have spent in the Development of the Project.

Nevertheless, with respect to the buyers of the Developer for the First Phase, the area intended for the Second
Phase shall not be bound and/or subjected to the said covenants and/or any other liability incurred by the Developer
in connection with the development of the first phase." (Underscoring supplied)

Viewed in the light of the foregoing provision of the JVA, petitioner cannot avoid liability by claiming that it was
not in any way privy to the Contracts to Sell executed by PPGI and respondents. As correctly argued by the latter,
moreover, a joint venture is considered in this jurisdiction as a form of partnership and is, accordingly, governed by
the law of partnerships.[54] Under Article 1824 of the Civil Code of the Philippines, all partners are solidarily liable
with the partnership for everything chargeable to the partnership, including loss or injury caused to a third person
or penalties incurred due to any wrongful act or omission of any partner acting in the ordinary course of the
business of the partnership or with the authority of his co-partners.[55] Whether innocent or guilty, all the partners
are solidarily liable with the partnership itself.[56]

WHEREFORE, premises considered, the petition for review is DENIED for lack of merit.

SO ORDERED.