Aurelio Litonjua Jr vs Eduardo Litonjua Sr. et al
CA
FACTS:
Aurelio and Eduardo are brothers. In 1973, Aurelio alleged that Eduardo entered into a contract
of partnership with him. Aurelio showed as evidence a letter sent to him by Eduardo that the
latter is allowing Aurelio to manage their family business (if Eduardos away) and in exchange
thereof he will be giving Aurelio P1 million or 10% equity, whichever is higher. A memorandum
was subsequently made for the said partnership agreement. The memorandum this time stated
that in exchange of Aurelio, who just got married, retaining his share in the family business
(movie theatres, shipping and land development) and some other immovable properties, he will
be given P1 Million or 10% equity in all these businesses and those to be subsequently acquired
by them whichever is greater.
In 1992 however, the relationship between the brothers went sour. And so Aurelio demanded an
accounting and the liquidation of his share in the partnership. Eduardo did not heed and so
Aurelio sued Eduardo.
ISSUE: Whether or not there exists a partnership.
HELD: No. The partnership is void and legally nonexistent. The documentary evidence presented
by Aurelio, i.e. the letter from Eduardo and the Memorandum, did not prove partnership.
The 1973 letter from Eduardo on its face, contains typewritten entries, personal in tone, but is
unsigned and undated. As an unsigned document, there can be no quibbling that said letter does
not meet the public instrumentation requirements exacted under Article 1771 (how partnership
is constituted) of the Civil Code. Moreover, being unsigned and doubtless referring to a
partnership involving more than P3,000.00 in money or property, said letter cannot be
presented for notarization, let alone registered with the Securities and Exchange Commission
(SEC), as called for under the Article 1772 (capitalization of a partnership) 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 Aurelios contribution, if any, to the supposed partnership.
The Memorandum is also not a proof of the partnership for the same is not a public instrument
and again, no inventory was made of the immovable property and no inventory was attached to
the Memorandum. Article 1773 of the Civil Code requires that if immovable property is
contributed to the partnership an inventory shall be had and attached to the contract.
Partnership- Art 1785-1789- Case digests
Ortega vs.
FACTS:
On December 19, 1980, respondent Misa associated himself together, as senior partner with
petitioners Ortega, del Castillo, Jr., and Bacorro, as junior partners. On Feb. 17, 1988, respondent
Misa wrote a letter stating that he is withdrawing and retiring from the firm and asking for a
meeting with the petitioners to discuss the mechanics of the liquidation. On June 30, 1988,
petitioner filed a petition to the Commision's Securities Investigation and Clearing Department
for the formal dissolution and liquidation of the partnership. On March 31, 1989, the hearing
officer rendered a decision ruling that the withdrawal of the petitioner has not dissolved the
partnership. On appeal, the SEC en banc reversed the decision and was affirmed by the Court of
Appeals. Hence, this petition.
ISSUE:
Whether or not the Court of Appeals has erred in holding that the partnership is a partnership at
will and whether or not the Court of Appeals has erred in holding that the withdrawal of private
respondent dissolved the partnership regardless of his good or bad faith
HELD:
No. The SC upheld the ruling of the CA regarding the nature of the partnership. The SC further
stated that a partnership that does not fix its term is a partnership at will. The birth and life of a
partnership at will is predicated on the mutual desire and consent of the partners. The right to
choose with whom a person wishes to associate himself is the very foundation and essence of
that partnership. Its continued existence is, in turn, dependent on the constancy of that mutual
resolve, along with each partner's capability to give it, and the absence of a cause for dissolution
provided by the law itself. Verily, any one of the partners may, at his sole pleasure, dictate a
dissolution of the partnership at will. He must, however, act in good faith, not that the attendance
of bad faith can prevent the dissolution of the partnership but that it can result in a liability for
damages.
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Isabelo Moran Jr Vs Ca & Mariano Pecson
FACTS:
On February 22, 1971 Pecson and Moran entered into an agreement whereby both would
contributeP15,000 each for the purpose of printing 95,000 posters (featuring the delegates to
the 1971 Constitutional Convention), with Moran actually supervising the work; that Pecson
would receive a commission of P l,000 a month starting on April 15, 1971 up to December 15,
1971; that on December 15, 1971, a liquidation of the accounts in the distribution and printing of
the 95,000 posters would be made, that Pecson gave Moran P10,000 for which the latter issued a
receipt; that only a few posters were printed& that on or about May 2*,1971, Moran executed in
favor of Pecson a promissory note in the amount of P20,000 payable in two equal installments,
the whole sum becoming due upon default in the payment of the first installment on the date
due, complete with the costs of collection.
3. W/N Moran is liable to Pecson in the sum of 7k as a supposed return of investment in a
magazine venture.
HELD:
The first question raised in this petition refers to the award of P87,500.00 as the private
respondents share in the unrealized profits of the partnership. The petitioner contends that the
award is highly speculative. The petitioner maintains that the respondent court did not take into
account the great risks involved in the business undertaking.
We agree with the petitioner that the award of speculative damages has no basis in fact and law.
There is no dispute over the nature of the agreement between the petitioner and the private
respondent. It is a contract of partnership. The latter in his complaint alleged that he was
induced by the petitioner to enter into a partnership with him. The petitioner on the other hand
admitted in his answer the existence of the partnership.

Private respondent Pecson filed with the CFI an action for the recovery of a sum of money and
alleged in his complaint: (1) on the alleged partnership agreement, the return of his contribution
of P10,000.00, payment of his share in the profits that the partnership would have earned, and,
payment of unpaid commission; (2) on the alleged promissory note, payment of the sum of
P20,000.00;

Court of First Instance ruled that by virtue of the partnership agreement entered into by the
parties -plaintiff and defendant the plaintiff did contribute 10%, and another sum of 7%for the
Voice of the Veteran or Delegate Magazine- Of the expected 95,000 copies of the posters, the
defendant was able to print 2,000 copies onlyauthorized of which, however, were sold at P5.00
each.

Nothing more was done after this and it can be said that the venture did not really get off the
ground. On the other hand, the plaintiff failed to give his full contribution of P15,000.00 Thus,
each party is entitled to rescind the contract. CFI ordered defendant Moran to return to plaintiff
Mariano E. Pecson the sum of 17K.

Both parties appealed to CA. CA ordered Moran to pay Pecson: a) P47,500 (the amount that could
have accrued to Pecson under their agreement) ; (b) P8,000, (the commission for eight months) ;
(c) P7,000 (as a return of Pecsons investment for the Veterans Project)

ISSUES:

1. W/N Moran is liable to Pecson in the sum of P87,500 as the supposed expected profits due
him.

2. W/N Moran is liable to Pecson in the sum of 8K as supposed commission in the partnership
arising out of Pecsons investment- NO.
Partnership- Art 1785-1789- Case digests Page 2

Uy vs. Puzon
FACTS: Puzon entered into a contract with the Republic of the Philippines for the construction of
a road and 5 bridges. However, Puzon found difficulty in accomplishing both projects, so he
established a partnership with Uy as sub-contractor of the projects for financial assistance and
the profits shall be divided equally between them; the resulting partnership is UP Construction
Company.
The partners agreed to contribute P50, 000 each as capital. However, Puzon failed to pay but
promised to contribute his share as soon as his application of loan with the PNB shall be
approved. Uy gave Puzon advance contribution of his share in partnership for Puzon top pay his
obligations with PNB.
Uy was entrusted with the management of the project since Puzon is busy with his other
projects; whatever expense Uy may incur shall be considered part of his contribution. Upon
approval of Puzons loan with the PNB, he gave Uy P60, 000 for reimbursement of Uys
contribution and Puzons contribution to the partnership capital. To guarantee the payment of
the loan, Puzon assigned to PNB all payments to be received on account of the contracts with the
Bureau of Public Highways for the construction; this was done without the knowledge and
consent of Uy.
Financial demands of the project increased, thus, Uy called on Puzon to place his capital
contribution; Puzon failed to do so. Uy thereafter sent letters of demand to which Puzon replied
that hes not capable of putting additional capital. Puzon wrote UP Construction Company
terminating their subcontract agreement.
Uy was then not allowed in the office of UP Construction Company and his authority to deal with
BPH was revoked. Hence, he instituted an action against Puzon seeking the dissolution of the
partnership and payment of damages for the violation of the latter of the terms of their
partnership agreement.
RTC found that Puzon failed to contribute his share in the capital of the partnership and caused
the failure of partnership to realize expected profits. The court ordered the dissolution of the
partnership and Puzon to pay Uy a certain sum. Franco Puzon substituted Bartolome Puzon on
the appeal of the case before the Supreme Court.
ISSUE/S: W/N the amount of money ordered by the trial court for the failure to contribute his
share in the capital of the partnership is proper.
Partnership- Art 1785-1789- Case digests
RULING: The award of P200,000.00 as his share in the unrealized profits of the partnership is
proper. Under Article 2200 of the Civil Code, indemnification for damages shall comprehend not
only the value of the loss suffered, but also that of the profits which the obligee failed to obtain.
In other words lucrum cessans is also a basis for indemnification. There is no doubt Uy failed to
make profits because of Puzon's breach of contract. The partnership showed some profits even
though the profit and loss statement showed net loss; it may be due to error in accounting.
Had the appellant not been remiss in his obligations as partner and as prime contractor of the
construction projects in question as he was bound to perform pursuant to the partnership and
subcontract agreements, and considering the fact that the total contract amount of these two
projects is P2,327,335.76, it is reasonable to expect that the partnership would have earned
much more than the P334,255.61 We have hereinabove indicated. The award, therefore, made by
the trial court of the amount of P200,000.00, as compensatory damages, is not speculative, but
based on reasonable estimate.
As cited in Moran vs. CA:
The rule is, when a partner who has undertaken to contribute a sum of money fails to do
so, he becomes a debtor of the partnership for whatever he may have promised to contribute
(Art. 1786, Civil Code) and for interests and damages from the time he should have complied
with his obligation (Art. 1788, Civil Code). Thus in Uy v. Puzon (79 SCRA 598), which interpreted
Art. 2200 of the Civil Code of the Philippines, we allowed a total of P200,000.00 compensatory
damages in favor of the appellee because the appellant therein was remiss in his obligations as a
partner and as prime contractor of the construction projects in question. This case was decided
on a particular set of facts. We awarded compensatory damages in the Uy case because there was
a finding that the constructing business is a profitable one and that the UP construction company
derived some profits from its contractors in the construction of roads and bridges despite its
deficient capital. Besides, there was evidence to show that the partnership made some
profits during the periods from July 2 , 1956 to December 31, 1957 and from January 1, 1958 up
to September 30, 1959. The profits on two government contracts worth P2,327,335.76 were not
speculative. In the instant case, there is no evidence whatsoever that the partnership between
the petitioner and the private respondent would have been a profitable venture. In fact, it was a
failure doomed from the start. There is therefore no basis for the award of speculative damages
in favor of the private respondent.
Furthermore, in the Uy case, only Puzon failed to give his full contribution while Uy
contributed much more than what was expected of him.
Page 3
 (2)If the right exists under the terms of any agreement;

(3)As provided by article 1807;

(4)Whenever other circumstances render it just and reasonable."

Evangelista & Co. V. Abad Santos

FACTS: In the case at hand, the company is estopped from denying Abad Santos as an industrial
partner because it has been 8 years and the company never corrected their agreement in order
On October 9, 1954 a co-partnership was formed under the name of "Evangelista & Co." On June to show their true intentions. The company never bothered to correct those up until Abad Santos
7, 1955 the Articles of Co-partnership were amended so as to include herein respondent, Estrella filed a complaint.
Abad Santos, as industrial partner, with herein petitioners Domingo C. Evangelista, Jr., Leonarda
Atienza Abad Santos and Conchita P. Navarro, the original capitalist partners, remaining in that
capacity, with a contribution of P17,500 each.

On December 17, 1963 herein respondent filed suit against the three other partners, 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 to let her examine the partnership books or to give her information
regarding the partnership affairs or to pay her any share in the dividends declared by the
partnership.

The defendants, in their answer, denied ever having declared dividends or distributed profits of
the partnership; denied likewise that the plaintiff ever demanded that she be allowed to examine
the partnership books; and by way of affirmative defense alleged that the amended Articles of
Co-partnership did not express the true agreement of the parties, which was that the plaintiff
was not an industrial partner; that she did not in fact contribute industry to the partnership.

ISSUE:

Whether Abad Santos is entitled to see the partnership books because she is an industrial
partner in the partnership

HELD:

Yes, Abad Santos is entitled to see the partnership books.

The Supreme Court ruled that according to

ART. 1299. Any partner shall have the right to a formal account as to partnership affairs:

(1)If he is wrongfully excluded from the partnership business or possession of its

property by his co-partners;

Partnership- Art 1785-1789- Case digests Page 4