Lozana vs.
Depakakibo ISSUE:
FACTS: Lozana and Depakakibo established a partnership for the
purpose of maintaining, operating, and distributing electric light and
power in the Municipality of Dumangas. The partnership is
capitalized at the sum of P30, 000.00 where Lozana agreed to
furnish 60% while Depakakibo, 40%. However, the franchise for
venture in favor of Buenaflor was cancelled and revoked by the
Public Service Commission. Lozana thereafter sold Generator Buda
[Lozanas contribution to the partnership; no liquidation made]
to Decologon. When the decision was appealed, a temporary
certificate of public convenience was issued in the name of
Decolongon. Depakakibo sold one Crossly Diesel Engine
[Depakakibos contribution to the partnership] to Spouses
Jimenea and Harder. Lozana brought action against Depakakibo
alleging the latter wrongfully detained the Generator Buda and
wooden posts to which he is entitled to the possession of. Lozano
prayed the properties be delivered back to him. CFI ordered sheriff
to take possession of the properties and the delivery thereof to
Lozano. Depakakibo alleged properties have been contributed to
the partnership and therefor he is not unlawfully detaining them. In
addition, Lozano sold his contribution to partnership in violation of
terms of their agreement. CFI declared Lozano owner of and
entitled to the equipment. Depakakibo appealed decision to the
Supreme Court.
W/N partnership is void or the act of the partnership in furnishing
electric current to the franchise holder without previous approval of
Public Service Commission render the partnership void?
W/N disposal of contribution of parties is allowed.
RULING:
Partnership is valid. The fact of furnishing the current to the holder
of the franchise alone, without the previous approval of the Public
Service Commission, does not per se make the contract of
partnership null and void from the beginning and render the
partnership entered into by the parties for the purpose also void
and non-existent Disposal of Contributed Property to the
Partnership. Facts show that parties entered into the contract of
partnership, Lozana contributing the amount of P18, 000, and there
has not been liquidation prior to the sale of the contributed
properties: Buda Diesel Engine and 70 posts. It necessarily follows
that the Buda diesel engine contributed by the plaintiff had become
the property of the partnership. As properties of the partnership,
the same could not be disposed of by the party contributing the
same without the consent or approval of the partnership or of the
other partner.
MAXIMILIANO SANCHO, vs. SEVERIANO LIZARRAGA
FACTS:
The plaintiff brought an action for the rescission of the partnership
contract between himself and the defendant and the
reimbursement of his investment worth 50,000php with interest at
12 per cent per annum form October 15, 1920, with costs, and any
other just and equitable remedy against said defendant. The
defendant denies generally and specifically all the allegations of the
complaint and asked for the dissolution of the partnership, and the
payment to him as its manager and administrator P500 monthly
from October 15, 1920 until the final dissolution with interest.
The CFI found that the defendant had not contributed all the capital
he had bound himself to invest hence it demanded that the
defendant liquidate the partnership, declared it dissolved on
account of the expiration of the period for which it was constituted,
and ordered the defendant, as managing partner, to proceed
without delay to liquidate it, submitting to the court the result of
the liquidation together with the accounts and vouchers within the
period of thirty days from receipt of notice of said judgment. The
plaintiff appealed from said decision praying for the rescission of
the partnership contract between him and the defendant in
accordance with Art. 1124.
ISSUE:
WON plaintiff acquired the right to demand rescission of the
partnership contract according to article 1124 of the Civil Code.
HELD:
The SC ruled that owing to the defendants failure to pay to the
partnership the whole amount which he bound himself to pay, he
became indebted to the partnership for the remainder, with
interest and any damages occasioned thereby, but the plaintiff did
not thereby acquire the right to demand rescission of the
partnership contract according to article 1124 of the Code. Article
1124 cannot be applied to the case in question, because it refers to
the resolution of obligations in general, whereas articles 1681 and
1682 specifically refer to the contract of partnership in particular.
And it is a well known principle that special provisions prevail over
general provisions. Hence, SC dismissed the appeal left the decision
appealed from in full force.
MORA v. MATIC
FACTS:
Paulino Matic obtained from the City of Manila the
concession to provide the lighting system of the Manila
North and South Cemeteries on All Saint's Day in 1934, for
the amount of P8,733, the payment of which was
guaranteed by Luzon Surety Co.
Matic transferred his rights to said concession to Benita
Quiogue, authorizing her to enter into a contract with Mora
Electric Co., Inc., to make the installation and to pay the
P8,773.
Benita Quiogue entered into this contract with Mora
Electric Co., Inc., each party binding itself to contribute the
necessary labor and material which the latter may be
unable to put up, and dividing the profits between them
after deducting there from all the necessary expenses for
labor, materials, cost of the current and the amount of
P8,773 which should be paid to the city, both parties also
binding themselves, for this purpose, to report the expenses
which each might have incurred.
The business was a failure because it did not yield the
expected profit.
ISSUE:
Whether or not Mora Electric is liable to pay the City of Manila as
stipulated in the contract with Matic and Quiogue.
HELD+RATIO:
YES, Mora Electric is liable to pay.
Mora Electric Co., Inc., bound itself in its contract with
Benita Quiogue to pay the City of Manila the P8,773.
Having undertaken to pay this amount to the City of Manila,
Mora Electric Co., Inc., is under a duty to reimburse
whoever made good the amount for it, namely, Paulino
Matic and Benita Quiogue.
Mora contends that Quiogue should share in the payment
because what exists between them is a civil partnership (i.e.
distribution of profits and losses).
But the SC held that the amount now sought to be
recovered is not claimed as loss or profit, but as the
contribution which Mora Electric Co., Inc., bound itself to
make to the partnership and which it was under a duty to
pay, although it was paid instead by Matic and Quiogue.
FINAL VERDICT: Appeal dismissed. SC affirmed CAs ruling
TORRES v. CA
FACTS:
In 1969, sisters Antonia Torres and Emeteria Baring entered into a
joint venture agreement with Manuel Torres. Under the agreement,
the sisters agreed to execute a deed of sale in favor Manuel over a
parcel of land, the sisters received no cash payment from Manuel
but the promise of profits (60% for the sisters and 40% for Manuel)
said parcel of land is to be developed as a subdivision.
Manuel then had the title of the land transferred in his name and he
subsequently mortgaged the property. He used the proceeds from
the mortgage to start building roads, curbs and gutters. Manuel also
contracted an engineering firm for the building of housing units. But
due to adverse claims in the land, prospective buyers were scared
off and the subdivision project eventually failed.
The sisters then filed a civil case against Manuel for damages
equivalent to 60% of the value of the property, which according to
the sisters, is whats due them as per the contract.
The lower court ruled in favor of Manuel and the Court of Appeals
affirmed the lower court.
The sisters then appealed before the Supreme Court where they
argued that there is no partnership between them and Manuel
because the joint venture agreement is void.
ISSUE: Whether or not there exists a partnership.
HELD:
Yes. The joint venture agreement the sisters entered into with
Manuel is a partnership agreement whereby they agreed to
contribute property (their land) which was to be developed as a
subdivision. While on the other hand, though Manuel did not
contribute capital, he is an industrial partner for his contribution for
general expenses and other costs. Furthermore, the income from
the said project would be divided according to the stipulated
percentage (60-40). Clearly, the contract manifested the intention
of the parties to form a partnership. Further still, the sisters cannot
invoke their right to the 60% value of the property and at the same
time deny the same contract which entitles them to it.
At any rate, the failure of the partnership cannot be blamed on the
sisters, nor can it be blamed to Manuel (the sisters on their appeal
did not show evidence as to Manuels fault in the failure of the
partnership). The sisters must then bear their loss (which is 60%).
Manuel does not bear the loss of the other 40% because as an
industrial partner he is exempt from losses.
Cuenco v. Vda. De Manguerra
FACTS
Concepcion (respondent) filed the initiatory complaint
herein for specific performance against her uncle Miguel
Cuenco (petitioner, later substituted by Cuyegkeng).
o Concepcions father, the late Don Mariano Jesus
Cuenco (who became Senator) and Miguel Cuenco
formed the Cuenco and Cuenco Law Offices
o Cuenco and Cuenco Law Offices served as lawyers
in two (2) cases entitled Valeriano Solon versus
Zoilo Solon and Valeriano Solon versus Apolonia
Solon involving a dispute among relatives over
ownership of lot 903 of the Banilad Estate
Records of said cases indicate the name of the Miguel alone
as counsel of record, but in truth and in fact, the real lawyer
behind the success of said cases was the influential Don
Mariano Jesus Cuenco
After winning the said cases:
o Lot 903-A: 5000 square meters (Don Mariano Jesus
Cuencos attorneys fees)
o Lot 903-B: 5000 square meters (Miguel Cuencos
attorneys fees)
o Lot 903-C: 54,000 square meters (Solons retention)
Mariano Cuenco entrusted Lot 903 A to Miguel.
o Miguel was able to obtain in his own name a title
for Lot 903-A
o Miguel was under the obligation to hold the title in
trust for his brother Marianos children by first
marriage
Lot 903-A was partitioned into six (6) sub-lots (Lots 903-A-1
to 903-A-6) to correspond to the six (6) children of
Marianos first marriage (Teresita, Manuel, Lourdes,
Carmen, Consuelo, and Concepcion)
The case of Concepcion
o Five deeds of donation were executed in favour of
five children. This left out Concepcion (who became
respondent in this case).
o Concepcion occupied Lot 903-A-6 and paid taxes for
it.
o When Concepcion went to the Register of Deeds to
register the Lot 903-A-6, there was an adverse claim
by Miguel saying that he was the absolute owner of
said lot.
Miguels allegations
o He executed five deeds of donation to five children
of his brother because of the love, care and
gratitude <3 they exhibited during his long sickness.
o Concepcion never visited him.
Miguel was able to take the witness stand but he became
sick and was not able to be present on cross-examination so
his testimony was stricken off the record.
Marietta Cuyegkeng (her only daughter) substituted him in
the case.
o She is the owner of the lot as he purchased it from
his father.
o That she was aware of the case because her father
used to commute to Cebu to attend hearings.
o That she constructed a house on the said lot.
Lower court and appellate court:
o Concepcion has the legal right of ownership over lot
903-A-6.
o The CA ruled that the subject land "is part of the
attorneys fees of Don Mariano Cuenco,
predecessor-in-interest of Concepcion Cuenco vda.
de Manguerra and Miguel merely holds such
property in trust for her.
ISSUE: o Marianos children, including Concepcion, were the
Whether Concepcion is entitled to ownership of the property (Lot ones who shouldered the expenses incurred for the
903-A-6) subdivision of the property
o After the subdivision of the property, Marianos
RULING children -- including Concepcion -- took possession
Given as attorneys fees was one hectare of Lot 903, of of their respective portions thereof.
which two five-thousand square meter portions were o The legal titles to five portions of the property were
identified as Lot 903-A and Lot 903-B. That only Miguel transferred via a gratuitous deed of conveyance to
handled Civil Case No. 9040 does not mean that he alone is Marianos five children, following the allocations
entitled to the attorneys fees in the said cases. "When a specified in the subdivision plan prepared for
client employs the services of a law firm, he does not Lourdes Cuenco.
employ the services of the lawyer who is assigned to Respondent is not barred by laches. In the present case,
personally handle the case. Rather, he employs the entire respondent has persistently asserted her right to Lot 903-A-
law firm." Being a partner in the law firm, Mariano -- like 6 against petitioner
Miguel -- was likewise entitled to a share in the attorneys
fees from the firms clients.
Although Lot 903-A was titled in Miguels name, the
circumstances surrounding the acquisition and the
subsequent partial dispositions of this property eloquently
speak of the intent that the equitable or beneficial
ownership of the property should belong to Mariano and
his heirs.
o Lot 903-A was one half of the one-hectare portion
of Lot 903 given as attorneys fees by a client of the
law firm of Partners Miguel and Mariano Cuenco.
Lot 903-A was one half of the one-hectare portion
of Lot 903 given as attorneys fees by a client of the
law firm of Partners Miguel and Mariano Cuenco
o Miguel readily surrendered his Certificate of Title
and interposed no objection to the subdivision and
the allocation of the property to Marianos six
children, including Concepcion.
Chuache v Insurance Commission
FACTS:
Azucena Palomo bought a parcel of land and building
from Rolando Gonzales and assumed a mortgage of the building
in favor of S.S.S. which was insured with S.S.S. Accredited Group
of Insurers
April 19, 1975: Azucena Palomo obtained a loan from Tai Tong
Chuache Inc. in the amount of P100,000 and to secure it, the
land and building was mortgaged
June 11, 1975: Pedro Palomo secured a Fire Insurance
Policy covering the building for P50,000 with Zenith Insurance
Corporation
July 16, 1975: another Fire Insurance policy was procured from
Philippine British Assurance Company, covering the same
building for P50,000 and the contents thereof for P70,000
Before the occurrence of the peril insured against the Palomos
had already paid their credit due the
July 31, 1975: building and the contents were totally razed by
fire
Palomo was able to claim P41,546.79 from Philippine British
Assurance Co., P11,877.14 from Zenith Insurance Corporation
and P5,936.57 from S.S.S. Group of Accredited Insurers
but Travellers Multi-Indemnity refused so it demanded the
balance from the other three but they refused so they filed
against them
Insurance Commission, CFI: absolved Travellers on the basis that
Arsenio Cua was claiming and NOT Tai Tong Chuache
Palomo Appealed
Travellers reasoned that the policy is endorsed to Arsenio Chua,
mortgage creditor
Tai Tong Chuache & Co. filed a complaint in intervention claiming
the proceeds of the fire Insurance Policy issued by travellers
affirmative defense of lack of insurable interest that before the
occurrence of the peril insured against the Palomos had already
paid their credit due the petitioner
ISSUE: W/N Tai Tong Chuache & Co. has insurable interest
HELD: YES. Travellers Multi-Indemnity Corporation to pay Tai Tong
Chuache & Co.
when the creditor is in possession of the document of credit, he
need not prove non-payment for it is presumed
The validity of the insurance policy taken b petitioner was not
assailed by private respondent. Moreover, petitioner's claim that
the loan extended to the Palomos has not yet been paid was
corroborated by Azucena Palomo who testified that they are still
indebted to herein petitioner
Chua being a partner of petitioner Tai Tong Chuache & Company
is an agent of the partnership. Being an agent, it is understood
that he acted for and in behalf of the firm
Upon its failure to prove the allegation of lack of insurable
interest on the part of the petitioner, Travellers must be held
liable
LITTON V. HILL & CERON
FACTS:
On February 14, 1934, George Litton, the plaintiff, sold and
delivered to Carlos Ceron, one of the managing partners of Hill &
Ceron, a certain number of mining claims. Then, defendant Carlos
Ceron delivered to Litton a document evidencing the fact that Ceron
of Hill & Ceron company received from Litton 17,000 shares of Big
Wedge Mining Company, sold at P0.11 per share or total of P1,870.
Ceron paid to Litton P1,150, leaving an unpaid balance of P720.
Unable to collect this sum from both Hill & Ceron and its surety,
Visayan Surety & Insurance Corporation, Litton filed a complaint in
the Court of First Instance of Manila against the said defendants for
the recovery of the said balance. The court ordered Ceron
personally to pay the amount and absolved the partnership Hill &
Ceron, Robert Hill and the Visayan Surety & Insurance Corporation.
CA affirmed RTC, ruling that Ceron did not intend to represent and
did not act for the firm Hill & Ceron in the transaction involved in
this litigation.
ISSUE:W/N Ceron represented the firm Hill & Ceron in buying some
mining claims from Litton.
HELD:
YES. The Court ruled that the transaction made by Ceron with Litton
should be understood as effected by Hill & Ceron and binding upon
it. Primarily, Robert Hill admitted when he testified at the trial the
following: a) that he and Ceron, during the partnership, had the
same power to buy and sell; b) that in said partnership Hill as well as
Ceron made the transaction as partners in equal parts; c) that on
the date of the transaction, the partnership between Hill and Ceron
was in existence In its decision, the CA said that the 6th paragraph
of the articles of copartnership of Hill & Ceron provides that the
management of the business affairs of the copartnership shall be
entrusted to both copartners, who shall jointly administer the
business affairs of the copartnership. A written contract of the firm
can only be signed by one of the partners if the other partner
consented. Now, assuming that Ceron attempted to represent the
firm in this contract with the Litton, the latter has failed to prove
that Hill had consented to such contract. It follows from the sixth
paragraph of the articles of partnership of Hill & Ceron that the
management of the business of the partnership has been entrusted
to both partners thereof, but the Supreme Court dissented from the
view of the CA that for one of the partners to bind the partnership
the consent of the other is necessary. Third persons, like the
plaintiff, are not bound in entering into a contract with any of the
two partners, to ascertain whether or not this partner with whom
the transaction is made has the consent of the other partner. The
public need not make inquires as to the agreements had between
the partners. Its knowledge is enough that it is contracting with the
partnership, which is represented by one of the managing partners.
There is a general presumption that each individual partner is an
authorized agent for the firm and that he has authority to bind the
firm in carrying on the partnership transactions. Furthermore, 2nd
paragraph of the articles of partnership of Hill & Ceron provides that
the purpose or object of the copartnership is to engage in the
business of brokerage in general. With that, none of the two
partners, under article 130 of the Code of Commerce, may legally
engage in the business of brokerage in general as stock brokers,
security brokers and other activities pertaining to the business of
the partnership. Ceron, therefore, could not have entered into the
contract of sale of shares with Litton as a private individual, but only
as a managing partner of Hill & Ceron. The appealed decision is
reversed and the defendants are ordered to pay to the plaintiff,
jointly and severally, the sum of P720, with legal interest.
RESOLUTION OF MOTION FOR RECONSIDERATION OF THE CASE
FACTS: Robert Hill, one of the defendants sentenced in the decision
to pay to the plaintiff, filed a motion for reconsideration, insisting
that the appellant had not established that Carlos Ceron, another of
the defendants, had the consent of his copartner, Hill, to enter with
the appellant into the contract whose breach gave rise to the
complaint. He said that it being stipulated in the articles of
partnership that Hill and Ceron would, as managers, have the
management of the business of the partnership, then Ceron could
not ignore the fact that the consent of the Hill was necessary for the
validity of the contract. And, there being no evidence that said
consent had been obtained, the complaint to compel compliance
with the said contract had to be, as it must be in fact, a procedural
failure.
ISSUE: 1. W/N the consent of Hill was necessary for the validity of
the contract entered into between Ceron and Litton. 2. W/N the
lack of consent of a partner/s (Hill) would annul a contract entered
into by another partner (Ceron).
HELD:
1. NO. The stipulation in the articles of partnership that any of the
two managing partners may contract and sign in the name of the
partnership with the consent of the other, creates an obligation
between the two partners, which consists in asking the other's
consent before contracting for the partnership. This obligation of
course is not imposed upon a third person who contracts with the
partnership; it is not necessary for the third person to ascertain if
the managing partner with whom he contracts has previously
obtained the consent of the other. A third person may and has a
right to presume that the partner with whom he contracts has, in
the ordinary and natural course of business, the consent of his
copartner. This finds support in the legal presumption that the
ordinary course of business has been followed, and that the law has
been obeyed. Therefore, unless the contrary is shown, the
presumption subsists. If we are to interpret the articles of
partnership in question by holding that it is the obligation of the
third person to inquire whether the managing copartner of the one
with whom he contracts has given his consent to said contract,
would operate to hinder business transactions.
2. NO. If Ceron stated to the appellant that he had the consent of
Hill, and if it turns out later that he did not have such consent, this
would not annul the contract. Article 130 of the Code of Commerce,
provides that when, not only without the consent, but even it is
against the will of any of the managing partners, a contract is
entered into with a third person who acts in good faith, and the
transaction is of the kind of business in which the partnership is
engaged, as in the present case, said contract shall not be annulled,
without prejudice to the liability of the guilty partner. This provision
is to protect a third person who contracts with one of the managing
partners of the partnership, thus avoiding fraud and deceit to which
he may easily fall a victim without this protection which the Code of
Commerce wisely provides. The motion for reconsideration is
DENIED.