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EVANGELISTA & CO v. ABAD SANTOS (G.R. No. 31684; June 28, 1973)

FACTS: On October 9, 1954 a co-partnership was formed under the name of "Evangelista & Co." On June 7, 1955
the Articles of Co-partnership was amended as to include herein respondent, Estrella Abad Santos, as industrial
partner, with herein petitioners Domingo C. Evangelista, Jr., Leonardo Atienza Abad Santos and Conchita P.
Navarro, the original capitalist partners, remaining in that capacity, with a contribution of P17,500 each. The
amended Articles provided, inter alia, that "the contribution of Estrella Abad Santos consists of her industry being
an industrial partner", and that the profits and losses "shall be divided and distributed among the partners ... in the
proportion of 70% for the first three partners, Domingo C. Evangelista, Jr., Conchita P. Navarro and Leonardo
Atienza Abad Santos to be divided among them equally; and 30% for the fourth partner Estrella Abad Santos."

On December 17, 1963 herein respondent filed suit against the three other partners in the Court of First Instance of
Manila, alleging that the partnership, which was also made a party-defendant, had been paying dividends to the
partners except to her; and that notwithstanding her demands the defendants had refused and continued to refuse and
let her examine the partnership books or to give her information regarding the partnership affairs to pay her any
share in the dividends declared by the partnership. She therefore prayed that the defendants be ordered to render
accounting to her of the partnership business and to pay her corresponding share in the partnership profits after such
accounting, plus attorney's fees and costs.

ISSUE: Whether or not Abad Santos is an industrial partner and is entitled to the shares of the partnership?

HELD: Yes. It is not disputed that the provision against the industrial partner engaging in business for himself seeks
to prevent any conflict of interest between the industrial partner and the partnership, and to insure faithful
compliance by said partner with this prestation. That appellee has faithfully complied with her prestation with
respect to appellants is clearly shown by the fact that it was only after filing of the complaint in this case and the
answer thereto appellants exercised their right of exclusion under the codal art just mentioned by alleging in their
Supplemental Answer, subsequent to the filing of defendants' answer to the complaint, defendants reached an
agreement whereby the herein plaintiff been excluded from, and deprived of, her alleged share, interests or
participation, as an alleged industrial partner, in the defendant partnership and/or in its net profits or income, on the
ground plaintiff has never contributed her industry to the partnership, instead she has been and still is a judge of the
City Court (formerly Municipal Court) of the City of Manila, devoting her time to performance of her duties as such
judge and enjoying the privilege and emoluments appertaining to the said office, aside from teaching in law school
in Manila, without the express consent of the herein defendants'. Having always knows as a appellee as a City judge
even before she joined appellant company as an industrial partner, why did it take appellants many yearn before
excluding her from said company as aforequoted allegations? And how can they reconcile such exclusive with their
main theory that appellee has never been such a partner because "The real agreement was to grant the appellee a
share of 30% of the net profits which the appellant partnership may realize from June 7, 1955, until the mortgage of
P30,000.00 obtained from the Rehabilitation Finance Corporal shall have been fully paid.
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LIM TONG LIM v. PHILIPPINE FISHING GEAR INDUSTRIES INC (G.R. No. 136448; November 3, 1999)

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.

The buyers, however, failed to pay for the fishing nets and the floats; hence, private respondents 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. 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.

ISSUE: Whether or not there was a partnership?

HELD: Yes. 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. 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. 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.

Heirs of Tan Eng Kee vs. CA (October 3, 2000)

FACTS: Heirs of Tan Eng Kee filed a complaint against the decedent’s brother, Tan Eng Lay for the accounting,
liquidation, and winding up of the alleged partnership formed after World War 2 between the brothers. The
complaint was amended later to implead Benguet Lumber Co., with Tan Eng Lay as its representative. Tan Eng
Lay, however, countered that he had his business and his brother (Tan Eng Kee) had his, and that it was only later on
that Tan Eng Kee came to work for him as an employee.

The trial court declared that Tan Eng Kee and Tan Eng Lay were joint adventurers and/or partners and ruled that
petitioners-heirs of the deceased Tan Eng Kee, had a right to share in the company's assets. The CA, however, ruled
that there was no partnership since Benguet Lumber was a sole proprietorship, and that Tan Eng Kee was only an
employee thereof.

ISSUE: W/N a partnership was formed between brothers.

HELD: There was no partnership between the brothers. Except for a firm name, there was no firm account, no firm
letterheads, no certificate of partnership, no agreement as to profits and losses, and no time fixed for the duration of
the partnership. Most importantly, for forty years Tan Eng Kee never demanded for an accounting. The essence of
a partnership is that the partners share in the profits and losses. Each has the right to demand an accounting as
long as the partnership exists. We have allowed a scenario wherein "[i]f excellent relations exist among the partners
at the start of the business and all the partners are more interested in seeing the firm grow rather than get immediate
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returns, a deferment of sharing in the profits is perfectly plausible." But in the situation in the case at bar, the
deferment, if any, had gone on too long to be plausible. A person is presumed to take ordinary care of his concerns.

The business establishment, which from the language of the appellees, prospered, definitely exceeded P3,000.00, in
addition to the accumulation of real properties and to the fact that it is now a compound. The execution of a public
instrument, on the other hand, was never established by the appellees.

The trial court determined that Tan Eng Kee and Tan Eng Lay had entered into a joint venture, which it said is akin
to a particular partnership. A particular partnership is distinguished from a joint adventure, to wit:

1. a joint venture (an American concept similar to out joint account) is a sort of informal partnership, with no firm
name and no legal personality. In a joint account, the participating merchants can transact business under their own
name, and can be individually liable therefore; and

2. usually, but not necessarily a joint venture is limited to a single transaction, although the business of pursuing to
a successful termination may continue for a number of years; a partnership generally relates to a continuing
business of various transactions of a certain kind.

It would seem that under the Philippine law, a joint venture is a form of partnership, specifically particular
partnership which has for its object specific undertaking. The Supreme Court has however recognized a distinction
between these 2 business forms and has HELD that although a corporation cannot enter into a partnership, it may
however engage in a joint venture with others.

Where circumstances taken singly may be inadequate to prove the intent to form a partnership, nevertheless, the
collective effect of these circumstances may be such as to support a finding of the existence of the parties' intent.
Yet, in the case at bench, even the aforesaid circumstances when taken together are not persuasive indicia of a
partnership. They only tend to show that Tan Eng Kee was involved in the operations of Benguet Lumber, but in
what capacity is unclear. We cannot discount the likelihood that as a member of the family, he occupied a niche
above the rank-and-file employees. He would have enjoyed liberties otherwise unavailable were he not kin, such as
his residence in the Benguet Lumber Company compound. He would have moral, if not actual, superiority over his
fellow employees, thereby entitling him to exercise powers of supervision. It may even be that among his duties is to
place orders with suppliers. Again, the circumstances proffered by petitioners do not provide a logical nexus to the
conclusion desired; these are not inconsistent with the powers and duties of a manager, even in a business
organized and run as informally as Benguet Lumber Company.

There being no partnership, it follows that there is no dissolution, winding up or liquidation to speak of. Hence, the
petition must fail.

WHEREFORE, the petition is hereby denied, and the appealed decision of the Court of Appeals is hereby
AFFIRMED in toto. No pronouncement as to costs.
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DAN FUE LEUNG, petitioner, vs. HON. INTERMEDIATE APPELLATE COURT and LEUNG YIU,
respondents.

FACTS: This case originated from a complaint filed by respondent Leung Yiu with the then Court of First Instance
of Manila, Branch II to recover the sum equivalent to twenty-two percent (22%) of the annual profits derived from
the operation of Sun Wah Panciteria since October, 1955 from petitioner Dan Fue Leung.

The Sun Wah Panciteria, a restaurant, located at Florentino Torres Street, Sta. Cruz, Manila, was established
sometime in October, 1955. It was registered as a single proprietorship and its licenses and permits were ISSUEd to
and in favor of petitioner Dan Fue Leung as the sole proprietor. Respondent Leung Yiu adduced evidence during the
trial of the case to show that Sun Wah Panciteria was actually a partnership and that he was one of the partners
having contributed P4,000.00 to its initial establishment.

The private respondent's evidence is summarized as follows:

About the time the Sun Wah Panciteria started to become operational, the private respondent gave P4,000.00 as his
contribution to the partnership. This is evidenced by a receipt identified as Exhibit "A" wherein the petitioner
acknowledged his acceptance of the P4,000.00 by affixing his signature thereto. The private respondent identified
the signature on the receipt as that of the petitioner (Exhibit A-3) because it was affixed by the latter in his (private
respondents's) presence. Witnesses So Sia and Antonio Ah Heng corroborated the private respondent's testimony to
the effect that they were both present when the receipt (Exhibit "A") was signed by the petitioner. So Sia further
testified that he himself received from the petitioner a similar receipt (Exhibit D) evidencing delivery of his own
investment in another amount of P4,000.00. An examination was conducted by the PC Crime Laboratory on orders
of the trial court granting the private respondent's motion for examination of certain documentary exhibits. The
signatures in Exhibits "A" and "D" when compared to the signature of the petitioner appearing in the pay envelopes
of employees of the restaurant, namely Ah Heng and Maria Wong (Exhibits H, H-1 to H-24) showed that the
signatures in the two receipts were indeed the signatures of the petitioner. llcd

Furthermore, the private respondent received from the petitioner the amount of P12,000.00 covered by the latter's
Equitable Banking Corporation Check No. 13389470-B from the profits of the operation of the restaurant for the
year 1974. Witness Teodulo Diaz, Chief of the Savings Department of the China Banking Corporation testified that
said check (Exhibit B) was deposited by and duly credited to the private respondent's savings account with the bank
after it was cleared by the drawee bank, the Equitable Banking Corporation.

The petitioner denied having received from the private respondent the amount of P4,000.00. He contested and
impugned the genuineness of the receipt (Exhibit D). His evidence is summarized as follows: The petitioner did not
receive any contribution at the time he started the Sun Wah Panciteria. He used his savings from his salaries as an
employee at Camp Stotsenberg in Clark Field and later as waiter at the Toho Restaurant amounting to a little more
than P2,000.00 as capital in establishing Sun Wah Panciteria. To bolster his contention that he was the sole owner of
the restaurant, the petitioner presented various government licenses and permits showing the Sun Wah Panciteria
was and still is a single proprietorship solely owned and operated by himself alone. Fue Leung also flatly denied
having ISSUEd to the private respondent the receipt (Exhibit G) and the Equitable Banking Corporation's Check No.
13389470 B in the amount of P12,000.00 (Exhibit B).

As between the conflicting evidence of the parties, the trial court gave credence to that of the plaintiff's. Hence, the
court ruled in favor of the private respondent.

Plaintiff also asked for a motion for reconsideration which was granted by the court the pertinent portion reads as
follows: "FOR ALL THE FOREGOING CONSIDERATIONS, the motion for reconsideration filed by the plaintiff,
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which was granted earlier by the Court, is hereby reiterated and the decision rendered by this Court on September
30, 1980, is hereby amended. The dispositive portion of said decision should read now as follows:

"WHEREFORE, judgment is hereby rendered, ordering the plaintiff (sic) and against the defendant, ordering the
latter to pay the former the sum equivalent to 22% of the net profit of P8,000.00 per day from the time of judicial
demand, until fully paid, plus the sum of P5,000.00 as and for attorney's fees and costs of suit." (p. 150, Rollo)

The petitioner appealed the trial court's amended decision to the then Intermediate Appellate Court. The modified
resolution of the appellate court is as follows:

WHEREFORE, judgment is rendered in favor of the plaintiff and against the defendant, ordering the latter to pay to
the former the sum equivalent to 22% of the net profit of P8,000.00 per day from the time of judicial demand, until
fully 'paid, plus the sum of P5,000.00 as and for attorney's fees and costs of suit'.

is hereby retained in full and affirmed in toto it being understood that the date of judicial demand is July 13, 1978."
(pp. 105-106, Rollo).

In the same resolution, the motion for reconsideration filed by petitioner was denied.

Both the trial court and the appellate court found that the private respondent is a partner of the petitioner in the
setting up and operations of the panciteria. While the dispositive portions merely ordered the payment of the
respondent's share, there is no question from the factual findings that the respondent invested in the business as a
partner. Hence, the two courts declared that the private petitioner is entitled to a share of the annual profits of the
restaurant. The petitioner, however, claims that this factual finding is erroneous.

ISSUE: Whether or not private respondent Leung Yiu is a partner of petitioner Dan Fue Leung in the establishment
of the Sun Wah Panciteria and therefore should be entitled to 22% of the annual income of the restaurant as averred
by the former

HELD: In essence, the private respondent alleged that when Sun Wah Panciteria was established, he gave
P4,000.00 to the petitioner with the understanding that he would be entitled to twenty-two percent (22%) of the
annual profit derived from the operation of the said panciteria. These allegations, which were proved, make the
private respondent and the petitioner partners in the establishment of Sun Wah Panciteria because Article 1767 of
the Civil Code provides that "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".

Therefore, the lower courts did not err in construing the complaint as one wherein the private respondent asserted his
rights as partner of the petitioner in the establishment of the Sun Wah Panciteria, notwithstanding the use of the term
financial assistance therein.

We agree with the appellate court's observation to the effect that ". . . given its ordinary meaning, financial
assistance 'is the giving out of money to another without the expectation of any returns therefrom'. It connotes an ex
gratia dole out in favor of someone driven into a state of destitution. But this circumstance under which the
P4,000.00 was given to the petitioner does not obtain in this case." (p. 99, Rollo) The complaint explicitly stated that
"as a return for such financial assistance, plaintiff (private respondent) would be entitled to twenty-two percentum
(22%) of the annual profit derived from the operation of the said panciteria." (p. 107, Rollo) The well-settled
doctrine is that the ". . . nature of the action filed in court is determined by the FACTS alleged in the complaint as
constituting the cause of action." (De Tavera v. Philippine Tuberculosis Society, Inc., 113 SCRA 243; Alger
Electric, Inc. v. Court of Appeals, 135 SCRA 37).
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The private respondent is a partner of the petitioner in Sun Wah Panciteria. The requisites of a partnership which are
— 1) two or more persons bind themselves to contribute money, property, or industry to a common fund; and 2)
intention on the part of the partners to divide the profits among themselves (Article 1767, Civil Code; Yulo v. Yang
Chiao Cheng, 106 Phil. 110) — have been established. As stated by the respondent, a partner shares not only in
profits but also in the losses of the firm. If excellent relations exist among the partners at the start of business and all
the partners are more interested in seeing the firm grow rather than get immediate returns, a deferment of sharing in
the profits is perfectly plausible. It would be incorrect to state that if a partner does not assert his rights anytime
within ten years from the start of operations, such rights are irretrievably lost. The private respondent's cause of
action is premised upon the failure of the petitioner to give him the agreed profits in the operation of Sun Wah
Panciteria. In effect the private respondent was asking for an accounting of his interests in the partnership.

Lilibeth Sunga Chan vs Lamberto Chua (G.R. No. 143340 August 15, 2001)

FACTS: In 1977, Lamberto Chua verbally entered into a partnership agreement with Jacinto L Sunga, father of
petitioner, 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.

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 the 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.

Trial court directed petitioner to render an accounting, to restitute to the partnership all properties, assets, income
and profits they misapplied and converted to their own use and advantage, to pay the plaintiff earned but unreceived
income and profits from the partnership from 1988 to May 30, 1992, ORDERING them to wind up the affairs of the
partnership and terminate its business activities pursuant to law. CA affirmed the decision.

ISSUES: WON there exists a partnership

HELD: Decision is affirmed.

Ratio Decidendi: A partnership may be constituted in any form, except where immovable property of real rights are
contributed thereto, in which case a public instrument shall 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
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arise.7 The essential profits that must be proven to that a partnership was agreed upon are (1) mutual contribution to
a common stock, and (2) a joint interest in the profits.8

AURELIO K. LITONJUA, JR., vs. EDUARDO K. LITONJUA, SR, et al. (G.R. Nos. 166299-300. December
13, 2005)

FACTS: Petitioner Aurelio Litonjua, Jr. and respondent Eduardo K. Litonjua, Sr. are brothers. Aurelio filed a suit
against Eduardo and Robert Yang and several corporations for specific performance and accounting. Aurelio alleged
that, since June 1973, he and Eduardo entered into a joint venture/partnership for the continuation of their family
business and common family funds. This joint venture/partnership agreement was contained in a memorandum
(Annex A) addressed by Eduardo to his siblings, parents and other relatives, and the portion referring to Aurelio was
submarked as Annex A-1. Aurelio alleged that he and Eduardo agreed that in consideration of Aurelio's retaining his
share in the remaining family businesses, Aurelio will be given P1 Million or 10% equity in all these businesses,
whichever is greater.

Petitioner claimed that he and Eduardo are into a joint venture/partnership arrangement in the Odeon Theater
business which had expanded thru investment in several corporations. Yang is described in the complaint as
petitioner's and Eduardo's partner in their Odeon Theater investment.

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

Part of Annex A-1 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 every time I am away…Whatever is left in the corporation, I will make sure that
you get P1,000,000.00 or 10% equity, whichever is greater. We two will gamble the whole thing of what I have and
what you are entitled to.

On December 20, 2002, Eduardo and the corporate respondents filed a joint ANSWER With Compulsory
Counterclaim, denying that petitioner and Eduardo entered into a contract of partnership. For his part, Yang moved
to dismiss on the ground that petitioner has no cause of action. Acting on the separate motions, the trial court denied
the affirmative defenses, as well as their motions for reconsideration.

Yang filed a petition for certiorari with CA to nullify trial court orders. Eduardo et al. also sought relief from the CA
via similar recourse. The two cases were consolidated.

The CA annulled, reversed, and set aside the trial court's orders, and the complaint filed by Aurelio was dismissed.
The alleged partnership, as evidenced by Annex A and A-1 and upon which petitioner solely predicates his right/s, is
void or legally inexistent.

ISSUES: The petitioner contended that the CA erred when it ruled that:

1. there was no partnership created by the actionable document because this was not a public instrument and
immovable properties were contributed to the partnership.

2. the actionable document did not create a demandable right in favor of petitioner.

3. the complaint stated no cause of action against Yang.

4. petitioner has changed his theory on appeal.

HELD:
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1. Annex A-1 is unsigned and undated. As an unsigned document, Annex A-1 does not meet the public
instrumentation requirements exacted under Article 1771 of the Civil Code. Moreover, being unsigned and 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.

As regards the inventory requirement under Article 1773, petitioner's contribution to the so-called "partnership/joint
venture" was his supposed share in the family business, consisting of movie theaters, shipping and land
development, which are immovable properties and real rights. Hence, 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. In
sum, Annex A-1 cannot support the existence of the partnership sued upon and sought to be enforced.

2. Petitioner asserted that Annex A-1 established an actionable contract even though it may not be a partnership.
This actionable contract is what is known as an innominate contract. 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.

3. If no action can successfully be maintained against respondent Eduardo because no valid partnership existed
between him and petitioner, the action could not also prosper against Yang. Yang could not have become a partner
in an inexistent partnership.

4. 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. An ISSUE which was neither averred in the complaint cannot be raised for the first time
on appeal.

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

MOBIL OIL PHILIPPINES, INC., petitioner, vs. COURT OF FIRST INSTANCE OF RIZAL, BRANCH
VI, GEMINIANO F. YABUT and AGUEDA ENRIQUEZ YABUT, respondents (G.R. No. 40457 May 8, 1992)

FACTS: The partnership La Mallorca, through its partner Miguel Enriquez, entered into a sales agreement to
purchase gasoline on credit with Mobil Oil Philippines. But because the mentioned purchase remained unpaid,
Mobil Oil filed a complaint in the Court of First Instance of Rizal against La Mallorca and its general partners,
which included private respondents.

Subsequently, Mobil Oil filed an Amended Complaint impleading the heirs of the deceased partners as defendants.

After Mobil Oil had presented its evidence, the counsel of the defendant successfully bargained for a compromise
agreement. The defense agreed to submit the case for decision solely on the basis of evidence adduced by plaintiff
Mobil Oil but past interest in the amount of P150,000.00 shall be excluded and that only nominal attorney's fees
shall be awarded.

Consequently, a Decision was rendered in favor of the Mobil Oil and against defendants. However, defendants filed
a Petition to Modify Decision and/or Petition for Reconsideration, averring that (1) that there was no stipulation or
agreement of the parties on the award of attorney's fees; (2) that Miguel Enriquez, not being a general partner, could
not bind the partnership in the Sales Agreement he signed with Mobil Oil; and (3) that defendant Geminiano Yabut
already withdrew as partner and president of La Mallorca as of September 14, 1972.

Thereafter, the CFI ISSUEd an order declaring its previous decision favouring Mobil Oil as null and void. The
ground for the decision is that there was no evidence to show that the counsel for the defendants had been duly
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authorized by the partnership to enter into a stipulation of FACTS, a compromise agreement or a confession
judgment with Mobil Oil. Mobil Oil filed a Motion for Reconsideration and Clarification but it was denied. Hence,
this petition.

ISSUE: Whether or not the sales agreement with Mobil Oil which was signed by Miguel Enriquez can bind the
partnership.

HELD: Yes, because Miguel Enriquez is a general partner of La Mallorca. He automatically became a general
partner of the partnership for being one of the heirs of the deceased general partner Mariano Enriquez. Article IV of
the Articles of Co-Partnership of La Mallorca provides that:

“If during the existence of this co-partnership, any of the herein partners should die, the co-partnership shall
continue to exist amongst the surviving partners and the heir or heirs of the deceased partner or partners.”

ISSUE: Whether or not the withdrawal of Yabut from the partnership will exempt him from liability.

HELD: No, the debt was incurred long before his withdrawal as partner and his resignation as President of La
Mallorca on September 14, 1972. Respondent Geminiano Yabut could not just withdraw unilaterally from the
partnership to avoid his liability as a general partner to third persons like the petitioner in the instant case.

ISSUE: Does non-active participation in the partnership exempt a partner from liability?

HELD: No, the alleged non-active participation of respondent Agueda Yabut in the partnership cannot exempt her
from the obligation. Active participation in a partnership is not a condition precedent for membership in a
partnership so as to be entitled to its profits or be burdened with its liabilities.

ISSUE: Was there a stipulation of FACTS, a compromise agreement or a confession of judgement?

HELD: Respondent court ISSUEd the following Order:

Calling this case for hearing today, the parties pray the Court that they are submitting the case for decision on the
basis of the evidence thus presented but to exclude past interest in the amount of about P150,000.00 and to award
nominal attorney's fees.

Finding the said motion in order, let judgment be rendered in accordance with the evidence so far presented.

The foregoing Order is not a stipulation of FACTS nor a confession of judgment. If at all, there has been a mutual
waiver by the parties of the right to present evidence in court on the part of the defendants on one hand, and waiver
of interest in the amount of P150,000.00 and the stipulated attorney's fees of 25% of the principal amount on the part
of the plaintiff, except a nominal one.

The counsels of the parties in this case had the implied authority to do all acts necessary or incidental to the
prosecution and management of the suit in behalf of their clients who were all present and never objected to the
disputed order of the respondent court. Parties are bound by the acts and mistakes of their counsel in procedural
matters. Mistakes of counsel as to the relevancy or irrelevancy of certain evidence or mistakes in the proper defense,
in the introduction of certain evidence, or in argumentation are, among others all mistakes of procedure, and they
bind the clients, as in the instant case.

MARIANO P. PASCUAL and RENATO P. DRAGON, petitioners, vs. THE COMMISSIONER OF


INTERNAL REVENUE and COURT OF TAX APPEALS, respondents
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FACTS: On June 22, 1965, petitioners bought two (2) parcels of land from Santiago Bernardino, et al. and on May
28, 1966, they bought another three (3) parcels of land from Juan Roque. The first two parcels of land were sold by
petitioners in 1968 to Marenir Development Corporation, while the three parcels of land were sold by petitioners to
Erlinda Reyes and Maria Samson on March 19, 1970. Petitioners realized a net profit in the sale made in 1968 in the
amount of P165,224.70, while they realized a net profit of P60,000.00 in the sale made in 1970. The corresponding
capital gains taxes were paid by petitioners in 1973 and 1974 by availing of the tax amnesties granted in the said
years.

However, in a letter dated March 31, 1979 of then Acting BIR Commissioner Efren I. Plana, petitioners were
assessed and required to pay a total amount of P107,101.70 as alleged deficiency corporate income taxes for the
years 1968 and 1970. Petitioners protested the said assessment in a letter of June 26, 1979 asserting that they had
availed of tax amnesties way back in 1974.

In a reply of August 22, 1979, respondent Commissioner informed petitioners that in the years 1968 and 1970,
petitioners as co-owners in the real estate transactions formed an unregistered partnership or joint venture taxable as
a corporation under Section 20(b) and its income was subject to the taxes prescribed under Section 24, both of the
National Internal Revenue Code; 1 that the unregistered partnership was subject to corporate income tax as
distinguished from profits derived from the partnership by them which is subject to individual income tax; and that
the availment of tax amnesty under P.D. No. 23, as amended, by petitioners relieved petitioners of their individual
income tax liabilities but did not relieve them from the tax liability of the unregistered partnership. Hence, the
petitioners were required to pay the deficiency income tax assessed.

Petitioners filed a petition for review with the respondent Court of Tax Appeals docketed as CTA Case No. 3045. In
due course, the respondent court by a majority decision of March 30, 1987, 2 affirmed the decision and action taken
by respondent commissioner with costs against petitioners.

It ruled that on the basis of the principle enunciated in Evangelista, 3 an unregistered partnership was in fact formed
by petitioners which like a corporation was subject to corporate income tax distinct from that imposed on the
partners.

ISSUE: Whether or not the petitioners formed an unregistered partnership or there is merely a co-ownership

HELD: The basis of the subject decision of the respondent court is the ruling of this Court in Evangelista. In the said
case, petitioners borrowed a sum of money from their father which together with their own personal funds they used
in buying several real properties. They appointed their brother to manage their properties with full power to lease,
collect, rent, ISSUE receipts, etc. They had the real properties rented or leased to various tenants for several years
and they gained net profits from the rental income. Thus, the Collector of Internal Revenue demanded the payment
of income tax on a corporation, among others, from them.

In Evangelista, there was a series of transactions where petitioners purchased twenty-four (24) lots showing that the
purpose was not limited to the conservation or preservation of the common fund or even the properties acquired by
them. The character of habituality peculiar to business transactions engaged in for the purpose of gain was present.

In the instant case, petitioners bought two (2) parcels of land in 1965. They did not sell the same nor make any
improvements thereon. In 1966, they bought another three (3) parcels of land from one seller. It was only 1968 when
they sold the two (2) parcels of land after which they did not make any additional or new purchase. The remaining
three (3) parcels were sold by them in 1970. The transactions were isolated. The character of habituality peculiar to
business transactions for the purpose of gain was not present.

"It is evident that an isolated transaction whereby two or more persons contribute funds to buy certain real estate for
profit in the absence of other circumstances showing a contrary intention cannot be considered a partnership.
11

'Persons who contribute property or funds for a common enterprise and agree to share the gross returns of that
enterprise in proportion to their contribution, but who severally retain the title to their respective contribution, are
not thereby rendered partners. They have no common stock or capital, and no community of interest as principal
proprietors in the business itself which the proceeds derived. (Elements of the Law of Partnership by Floyd D.
Mechem, 2nd Ed., section 83, p. 74.)

'A joint purchase of land, by two, does not constitute a co-partnership in respect thereto; nor does an agreement to
share the profits and losses on the sale of land create a partnership; the parties are only tenants in common.' (Clark
vs. Sideway, 142 U.S. 682,12 Ct. 327, 35 L. Ed., 1157.)

The sharing of returns does not in itself establish a partnership whether or not the persons sharing therein have a
joint or common right or interest in the property. There must be a clear intent to form a partnership, the existence of
a juridical personality different from the individual partners, and the freedom of each party to transfer or assign the
whole property.

In the present case, there is clear evidence of co-ownership between the petitioners. There is no adequate basis to
support the proposition that they thereby formed an unregistered partnership. The two isolated transactions whereby
they purchased properties and sold the same a few years thereafter did not thereby make them partners. They shared
in the gross profits as co-owners and paid their capital gains taxes on their net profits and availed of the tax amnesty
thereby. Under the circumstances, they cannot be considered to have formed an unregistered partnership which is
thereby liable for corporate income tax, as the respondent commissioner proposes.

And even assuming for the sake of argument that such unregistered partnership appears to have been formed, since
there is no such existing unregistered partnership with a distinct personality nor with assets that can be HELD liable
for said deficiency corporate income tax, then petitioners can be HELD individually liable as partners for this unpaid
obligation of the partnership. 7 However, as petitioners have availed of the benefits of tax amnesty as individual
taxpayers in these transactions, they are thereby relieved of any further tax liability arising therefrom.

WHEREFORE, the petition is hereby GRANTED and the decision of the respondent Court of Tax Appeals of
March 30, 1987 is hereby REVERSED and SET ASIDE and another decision is hereby rendered relieving
petitioners of the corporate income tax liability in this case, without pronouncement as to costs.

Primelink v Lopez (G.R. No. 167379 June 27, 2006)

FACTS: Primelink Properties and Development Corporation (Primelink for brevity) is a domestic corporation
engaged in real estate development. Rafaelito W. Lopez is its President and Chief Executive Officer.3

Ma. Clara T. Lazatin-Magat and her brothers, are co-owners of two (2) adjoining parcels of landlocated in Tagaytay
City and covered by Transfer Certificate of Title (TCT) No. T-108484 of the Register of Deeds of Tagaytay City.

On March 10, 1994, the Lazatins and Primelink, represented by Lopez, in his capacity as President, entered into a
Joint Venture Agreement5 (JVA) for the development of the aforementioned property into a residential subdivision
to be known as "Tagaytay Garden Villas." Under the JVA, the Lazatin siblings obliged themselves to contribute the
two parcels of land as their share in the joint venture. For its part, Primelink undertook to contribute money, labor,
personnel, machineries, equipment, contractor’s pool, marketing activities, managerial expertise and other needed
resources to develop the property and construct therein the units for sale to the public.

In a Letter13 dated April 10, 1997, the Lazatins, through counsel, demanded that Primelink comply with its
obligations under the JVA, otherwise the appropriate action would be filed against it to protect their rights and
interests. This impelled the officers of Primelink to meet with the Lazatins and enabled the latter to review its
business records/papers. In another Letter14 dated October 22, 1997, the Lazatins informed Primelink that they had
12

decided to rescind the JVA effective upon its receipt of the said letter. The Lazatins demanded that Primelink cease
and desist from further developing the property.

Trial court rendered a decision rescinding the Joint Venture Agreement executed between the plaintiffs and the
defendants; immediately restoring to the plaintiffs possession of the subject parcels of land; ordering the defendants
to render an accounting of all income generated as well as expenses incurred and disbursement made in connection
with the project. CA affirmed trial court’s decision rulingthat, under Philippine law, a joint venture is a form of
partnership and is to be governed by the laws of partnership.

ISSUE: WON trial court erred in rescinding the JVA between the parties

HELD: SC affirmed appellate court’s decision.

Ratio Decidendi: As a general rule, the relation of the parties in joint ventures is governed by their agreement. When
the agreement is silent on any particular ISSUE, the general principles of partnership may be resorted to. The legal
concept of a joint venture is of common law origin. It has no precise legal definition, but it has been generally
understood to mean an organization formed for some temporary purpose. It is, in fact, hardly distinguishable from
the partnership, since elements are similar – community of interest in the business, sharing of profits and losses, and
a mutual right of control. The main distinction cited by most opinions in common law jurisdictions is that the
partnership contemplates a general business with some degree of continuity, while the joint venture is formed for the
execution of a single transaction, and is thus of a temporary nature. this observation is not entirely accurate in this
jurisdiction, since under the Civil Code, a partnership may be particular or universal, and a particular partnership
may have for its object a specific undertaking. It would seem therefore that, under Philippine law, a joint venture is a
form of partnership and should thus be governed by the laws of partnership. The Supreme Court has, however,
recognized a distinction between these two business forms, and has HELD that although a corporation cannot enter
into a partnership contract, it may, however, engage in a joint venture with others.

When the RTC rescinded the JVA on complaint of respondents based on the evidence on record that petitioners
willfully and persistently committed a breach of the JVA, the court thereby dissolved/cancelled the partnership.54
With the rescission of the JVA on account of petitioners’ fraudulent acts, all authority of any partner to act for the
partnership is terminated except so far as may be necessary to wind up the partnership affairs or to complete
transactions begun but not yet finished.55 On dissolution, the partnership is not terminated but continues until the
winding up of partnership affairs is completed.56 Winding up means the administration of the assets of the
partnership for the purpose of terminating the business and discharging the obligations of the partnership.

G.R. No. 85494 May 7, 1991

CHOITHRAM JETHMAL RAMNANI AND/OR NIRMLA V. RAMNANI and MOTI G. RAMNANI,


petitioners, vs.COURT OF APPEALS, SPOUSES ISHWAR JETHMAL RAMNANI, SONYA JETHMAL
RAMNANI and OVERSEAS HOLDING CO., LTD., respondents.

G.R. No. 85496 May 7, 1991

SPOUSES ISHWAR JETHMAL RAMNANI AND SONYA JET RAMNANI, petitioners, vs. THE
HONORABLE COURT OF APPEALS, ORTIGAS & CO., LTD. PARTNERSHIP, and OVERSEAS
HOLDING CO., LTD., respondents.

FACTS: Ishwar Jethmal Ramnani and his wife Sonya had their main business based in New York. Ishwar received
US $150,000.00 from his father-in-law in Switzerland.
13

In 1965, Ishwar Jethmal Ramnani sent the amount of US $150,000.00 to Choithram in two bank drafts of
US$65,000.00 and US$85,000.00 for the purpose of investing the same in real estate in the Philippines.

Subsequently, spouses Ishwar executed a general power of attorney appointing Ishwar’s full blood brothers
Choithram and Navalrai as attorneys-in-fact, empowering them to manage and conduct their business concerns in
the Philippines.

Choithram, as attorney-in-factr, entered into two agreements for the purchase of two parcels of land located in Pasig
Rizal from Ortigas & Company, Ltd. Partnership (Ortigas Ltd.) with a total area of approximately 10,048 square
meters.

Three buildings were constructed thereon and were leased out by Choithram as attorney-in-fact of spouses Ishwar.
Two of these buildings were later burned.

In 1970 Ishwar asked Choithram to account for the income and expenses relative to these properties during the
period 1967 to 1970.

Choithram failed and refused to render such accounting which prompted Ishwar to revoke the general power of
attorney.

Choithram and Ortigas Ltd. were duly notified by notice in writing of such revocation. It was also registered with
the Securities and Exchange Commission and published in The Manila Times.

Nevertheless, Choithram as such attorney-in-fact of Ishwar, transferred all rights and interests of Ishwar spouses in
favor of Nirmla Ramnani, the wife of Choitram’s son, Moti.

Ortigas also executed the corresponding deeds of sale in favor of Nirmla and the TCT ISSUEd in her favour..

Thus, spouses Ishwar filed a complaint in the Court of First Instance of Rizal against Choithram and spouses Nirmla
and Moti (Choithram et al.) and Ortigas Ltd. for reconveyance of said properties or payment of its value and
damages.

Trial court dismissed the complaint ruling that the lone testimony of Ishwar regarding the cash remittance is
unworthy of faith and credit because the cash remittance was made before the execution of the general power of
attorney. Ishwar also failed to corroborate this lone testimony and did not exhibit any commercial document as
regard to the alleged remittances.

It believed the claim of Choitram that he and Ishwar entered into a temporary arrangement in order to enable
Choithram, then a British citizen, to purchase the properties in the name of Ishwar who was an American citizen and
who was then qualified to purchase property in the Philippines under the then Parity Amendment.

Upon appeal, the CA reversed the decision and gave credence to Ishwar.

It upHELD the validity of Ishwar’s testimony and gave cognizance to a letter written by Choihtram imploring
Ishwar to renew the power of attorney after it was revoked. It states therein that Choithram reassures his brother that
he is not after his money and that the revocation is hurting the reputation of Ishwar. Choithram also made no
mention of his claimed temporary arrangement in the letter..

The CA ruled that Choithram is also estopped in pais or by deed from claiming an interest over the properties.
Because of Choitram’s admissions from (1) power of attorney, (2) the Agreements, and (3) the Contract of Lease
14

It furthermore HELD that Choithram's 'temporary arrangement, by which he claimed purchasing the two (2) parcels
in question in 1966 and placing them in the name of Ishwar who is an American citizen circumvents the
disqualification provision of aliens acquiring real properties in the Philippines. Upholding the supposed "temporary
arrangement" with Ishwar would be sanctioning the perpetration of an illegal act and culpable violation of the
Constitution.

During the pendency of the case, Choithram made several attempts to dispose of his properties by way of donation
and also mortgaged the properties under litigation for 3 million USD to a shell partnership with a mere capital of
100 USD.

The Supreme Court affirms the findings of the Court of Appeals.

ISSUE: Whether or not there was a partnership between the brothers Ishwar and Choithram

HELD: Yes, Even without a written agreement, the scenario is clear. Spouses Ishwar supplied the capital of
$150,000.00 for the business. They entrusted the money to Choithram to invest in a profitable business venture in
the Philippines. For this purpose they appointed Choithram as their attorney-in-fact.

Choithram in turn decided to invest in the real estate business. He bought the two (2) parcels of land in question
from Ortigas as attorney-in-fact of Ishwar- Instead of paying for the lots in cash, he paid in installments and used the
balance of the capital entrusted to him, plus a loan, to build two buildings. Although the buildings were burned later,
Choithram was able to build two other buildings on the property. He rented them out and collected the rentals.
Through the industry and genius of Choithram, Ishwar's property was developed and improved into what it is now—
a valuable asset worth millions of pesos.

We have a situation where two brothers engaged in a business venture. One furnished the capital, the other
contributed his industry and talent. Justice and equity dictate that the two share equally the fruit of their joint
investment and efforts. Perhaps this Solomonic solution may pave the way towards their reconciliation. Both would
stand to gain. No one would end up the loser. After all, blood is thicker than water.

However, because of the devious machinations and schemes that Choithram employed he should pay moral and
exemplary damages as well as attorney's fees to spouses Ishwar.

ISSUE: Whether or not Ortigas Ltd. is liable.

HELD: Yes, because Ortigas had several notices of the revocation. Despite said notices, Ortigas nevertheless
acceded to the representation of Choithram, as alleged attorney-in-fact of Ishwar, to assign the rights of petitioner
Ishwar to Nirmla. While the primary blame should be laid at the doorstep of Choithram, Ortigas is not entirely
without fault. It should have required Choithram to secure another power of attorney from Ishwar. For recklessly
believing the pretension of Choithram that his power of attorney was still good, it must, therefore, share in the
latter's liability to Ishwar.

Santos VS. Spouses Reyes

FACTS: On June 13, 1986, a lending business venture was launched by Fernando Santos (petitioner),
Nieves Reyes (respondent) and Meliton Zabat with the agreement that Santos will be the financer and will receive
the lion’s share of 70% of the profit. The rest will receive 15% each.

Thereafter, Zabat was replaced by the husband of Reyes because it was discovered that the latter was engaged in the
same lending business in competition with their partnership.
15

On June 5, 1987, Zabat filed a complaint for the recovery of sum of money from the spouses Reyes claiming that the
latter misappropriated funds as employees. The spouses Reyes answered that they are not mere employees but
partners of the petitioner.

The trial court ruled in favor of Spouses Reyes and was affirmed by the Court of Appeals.

ISSUE: WON there was a partnership established to engage in a money-lending business.

WON the CA is correct in granting the spouses Reyes’ counterclaim for their share in partnership and for damages.

HELD: As to the first ISSUE, there is an establishment of a partnership. Under the contract of partnership, two or
more persons bind themselves to contribute money, property and industry to a common fund, with the intention of
dividing the profit among themselves. The stipulation between the petitioner and the respondent spouses clearly
shows that there is a partnership wherein the “Articles of Agreement”, there are signatories that they shall share the
profits of the business in 70-15-15 manner, with petitioner getting the lion’s share.

As to the second ISSUE, the SC found a reason to disagree with CA. exhibit “10-I” showed that the partnership
earned a total income of P20,429,520 for the period of June 13, 1986 until April 19, 1987. It did not consider the
expenses sustained by the partnership. All expenses incurred by the money-lending enterprise of the parties must
first be deducted from the “total income” in order to arrive at the “net profit”. The respondents’ exhibits did not
reflect the complete financial condition of the money-lending business.

Angeles VS. Sec. Of Justice

FACTS: On November 1992, Mercado convinced Angeles spouses to enter into a contract of antichresis
(sanglaang-perde), covering 8 parcels of land planted with fruit-bearing lanzones trees located in Laguna and owned
by Ivana Sazo. The said contract was to last for 5 years with P210,000 as consideration. Since during only the
weekends are the spouses able to go to Laguna, Mercado administered the lands and completed the necessary paper
works. Mercado gave accounting only in 1993 and stopped in the year 1995. They discovered that Mercado had put
the contract of sanglaang-perde under Mercado and his spouse’s names.

In Mercado’s counter affidavit, he alleged that there was (sosyo industrial) or industrial partnership agreement
between them and that the Angeles spouses are the financiers and Mercado and his spouse as industrial partners.
Under the industrial agreement, capital would come from the Angeles spouses while the profit would be divided
evenly between Mercado and the Angeles spouses.

In the ruling of the Provincial Prosecution Office, it stated that the accusation of “estafa” lacks enough credible
evidentiary support to sustain a prima facie finding. The Angeles spouses appealed on the Secretary of Justice. It
was ruled that the crime of estafa cannot be sustained.

ISSUE: WON a partnership existed between Mercado and the Angeles spouses.

HELD: There was an establishment of partnership between Mercado and the Angeles spouses. There is a contract
showing industrial relationship and contribution of money and industry to a common fund, and the division of
profits between Angeles spouses and Mercado.

Furthermore, the Angeles spouses contributed money to the partnership and not immovable property and the mere
failure to register the contract of partnership does not affect the liability of the partnership. The purpose of
registration of the COP is to give notice to third parties. Failure to register the COP, does not affect the liability of
the partnership’s juridical personality. A partnership may exist even if the partners do not use the words “partner” or
“partnership”.
16

MARJORIE TOCAO and WILLIAM T. BELO, petitioners, vs. COURT OF APPEALS and NENITA A.
ANAY, respondent.

RESOLUTION

The inherent powers of a Court to amend and control its processes and orders so as to make them conformable to
law and justice includes the right to reverse itself, especially when in its honest opinion it has committed an error or
mistake in judgment, and that to adhere to its decision will cause injustice to a party litigant.1

On November 14, 2001, petitioners Marjorie Tocao and William T. Belo filed a Motion for Reconsideration of our
Decision dated October 4, 2000. They maintain that there was no partnership between petitioner Belo, on the one
hand, and respondent Nenita A. Anay, on the other hand; and that the latter being merely an employee of petitioner
Tocao.

After a careful review of the evidence presented, we are convinced that, indeed, petitioner Belo acted merely as
guarantor of Geminesse Enterprise. This was categorically affirmed by respondent's own witness, Elizabeth
Bantilan, during her cross-examination. Furthermore, Bantilan testified that it was Peter Lo who was the company's
financier. Thus:

Q - You mentioned a while ago the name William Belo. Now, what is the role of William Belo with Geminesse
Enterprise?

A - William Belo is the friend of Marjorie Tocao and he was the guarantor of the company.

Q - What do you mean by guarantor?

A - He guarantees the stocks that she owes somebody who is Peter Lo and he acts as guarantor for us. We can
borrow money from him.

Q - You mentioned a certain Peter Lo. Who is this Peter Lo?

A - Peter Lo is based in Singapore.

Q - What is the role of Peter Lo in the Geminesse Enterprise?

A - He is the one fixing our orders that open the L/C.

Q - You mean Peter Lo is the financier?

A - Yes, he is the financier.

Q - And the defendant William Belo is merely the guarantor of Geminesse Enterprise, am I correct?

A - Yes, sir2

The foregoing was neither refuted nor contradicted by respondent's evidence. It should be recalled that the business
relationship created between petitioner Tocao and respondent Anay was an informal partnership, which was not
even recorded with the Securities and Exchange Commission. As such, it was understandable that Belo, who was
after all petitioner Tocao's good friend and confidante, would occasionally participate in the affairs of the business,
although never in a formal or official capacity.3 Again, respondent's witness, Elizabeth Bantilan, confirmed that
petitioner Belo's presence in Geminesse Enterprise's meetings was merely as guarantor of the company and to help
petitioner Tocao.4
17

Furthermore, no evidence was presented to show that petitioner Belo participated in the profits of the business
enterprise. Respondent herself professed lack of knowledge that petitioner Belo received any share in the net income
of the partnership.5 On the other hand, petitioner Tocao declared that petitioner Belo was not entitled to any share in
the profits of Geminesse Enterprise.6 With no participation in the profits, petitioner Belo cannot be deemed a partner
since the essence of a partnership is that the partners share in the profits and losses.7

Consequently, inasmuch as petitioner Belo was not a partner in Geminesse Enterprise, respondent had no cause of
action against him and her complaint against him should accordingly be dismissed.

As regards the award of damages, petitioners argue that respondent should be deemed in bad faith for failing to
account for stocks of Geminesse Enterprise amounting to P208,250.00 and that, accordingly, her claim for damages
should be barred to that extent. We do not agree. Given the circumstances surrounding private respondent's sudden
ouster from the partnership by petitioner Tocao, her act of withholding whatever stocks were in her possession and
control was justified, if only to serve as security for her claims against the partnership. However, while we do not
agree that the same renders private respondent in bad faith and should bar her claim for damages, we find that the
said sum of P208,250.00 should be deducted from whatever amount is finally adjudged in her favor on the basis of
the formal account of the partnership affairs to be submitted to the Regional Trial Court.

WHEREFORE, based on the foregoing, the Motion for Reconsideration of petitioners is PARTIALLY GRANTED.
The Regional Trial Court of Makati is hereby ordered to DISMISS the complaint, docketed as Civil Case No. 88-
509, as against petitioner William T. Belo only. The sum of P208,250.00 shall be deducted from whatever amount
petitioner Marjorie Tocao shall be HELD liable to pay respondent after the normal accounting of the partnership
affairs.

ANTONIA TORRES assisted by her husband, ANGELO TORRES; and EMETERIA BARING, petitioners,
vs. COURT OF APPEALS and MANUEL TORRES, respondents.

FACTS: This is a petition for Review on Certiorari for the decision of the Court of Appeals affirming the decision of
the Trial Court in favour of herein respondent and denying reconsideration.

Sisters Antonia Torres and Emeteria Baring, petitioners, entered into a "joint venture agreement" with Respondent
Manuel Torres for the development of a parcel of land into a subdivision. They executed a Deed of Sale covering the
said parcel of land in favor of respondent, who then had it registered in his name. By mortgaging the property,
respondent obtained from Equitable Bank a loan of P40,000 which was to be used for the development of the
subdivision. All three of them also agreed to share the proceeds from the sale of the subdivided lots.

The project did not push through, and the land was subsequently foreclosed by the bank.

Respondent used the loan to implement the Agreement, among others are: effect the survey and subdivision of the
lots; approval of the subdivision project with Lapu Lapu City Council; advertisement in the local newspaper;
construction of roads, curbs and gutters; and construction of 6 low cost housing units.

Respondent claimed that the subdivision project failed, however, because petitioners and their relatives had
separately caused the annotations of adverse claims on the title to the land, which eventually scared away
prospective buyers. Despite his requests, petitioners refused to cause the clearing of the claims, thereby forcing him
to give up on the project.

Petitioners filed with the RTC a civil action against respondent. RTC ruled in favour of respondent and which was
later affirmed by CA. Hence, this Petition.
18

ISSUE: WON, the CA erred in concluding that the agreement entered between petitioners and respondent was that
of a joint venture/partnership.

HELD: Art. 1767. By the contract of partnership two or more persons bind themselves to contribute money,
property, or industry to a common fund, with the intention of dividing the profits among themselves.

Under the parties Agreement, petitioners would contribute property to the partnership in the form of land which was
to be developed into a subdivision; while respondent would give, in addition to his industry, the amount needed for
general expenses and other costs. Furthermore, the income from the said project would be divided according to the
stipulated percentage. Clearly, the contract manifested the intention of the parties to form a partnership.

It should be stressed that the parties implemented the contract. Thus, petitioners transferred the title to the land to
facilitate its use in the name of the respondent. On the other hand, respondent caused the subject land to be
mortgaged, the proceeds of which were used for the survey and the subdivision of the land and so on. Respondent's
actions clearly contradict petitioners' contention that he made no contribution to the partnership. Under Article 1767
of the Civil Code, a partner may contribute not only money or property, but also industry.

Moreover, petitioners contend that they cannot be bound by the contract.

Art. 1315. Contracts are perfected by mere consent, and from that moment the parties are bound not only to the
fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature,
may be in keeping with good faith, usage and law.

It is undisputed that petitioners are educated and are thus presumed to have understood the terms of the contract they
voluntarily signed. If it was not in consonance with their expectations, they should have objected to it and insisted
on the provisions they wanted.

Courts are not authorized to extricate parties from the necessary consequences of their acts, and the fact that the
contractual stipulations may turn out to be financially disadvantageous will not relieve parties thereto of their
obligations. They cannot now disavow the relationship formed from such agreement due to their supposed
misunderstanding of its terms.

Lastly, claiming that respondent was solely responsible for the failure of the subdivision project, petitioners maintain
that he should be made to pay damages equivalent to 60 percent of the value of the property, which was their share
in the profits under the Joint Venture Agreement.

We are not persuaded. True, the Court of Appeals HELD that petitioners' acts were not the cause of the failure of the
project. But it also ruled that neither was respondent responsible therefor. In imputing the blame solely to him,
petitioners failed to give any reason why we should disregard the factual findings of the appellate court relieving
him of fault. Accordingly, we find no reversible error in the CA's ruling that petitioners are not entitled to damages.

WHEREFORE, the Petition is hereby DENIED and the challenged Decision AFFIRMED. Costs against petitioners.