AGUILA VS CA

In April 1991, the spouses Ruben and Felicidad Abrogar entered into a loan agreement with a lending firm
called A.C. Aguila & Sons, Co., a partnership. The loan was for P200k. To secure the loan, the spouses
mortgaged their house and lot located in a subdivision. The terms of the loan further stipulates that in case
of non-payment, the property shall be automatically appropriated to the partnership and a deed of sale be
readily executed in favor of the partnership. She does have a 90 day redemption period.
Ruben died, and Felicidad failed to make payment. She refused to turn over the property and so the firm
filed an ejectment case against her (wherein she lost). She also failed to redeem the property within the
period stipulated. She then filed a civil case against Alfredo Aguila, manager of the firm, seeking for the
declaration of nullity of the deed of sale. The RTC retained the validity of the deed of sale. The Court of
Appeals reversed the RTC. The CA ruled that the sale is void for it is a pactum commissorium sale which
is prohibited under Art. 2088 of the Civil Code (note the disparity of the purchase price, which is the loan
amount, with the actual value of the property which is after all located in a subdivision).
ISSUE: Whether or not the case filed by Felicidad shall prosper.
HELD: No. Unfortunately, the civil case was filed not against the real party in interest. As pointed out by
Aguila, he is not the real party in interest but rather it was the partnership A.C. Aguila & Sons, Co. The Rules
of Court provide that “every action must be prosecuted and defended in the name of the real party in
interest.” A real party in interest is one who would be benefited or injured by the judgment, or who is entitled
to the avails of the suit. Any decision rendered against a person who is not a real party in interest in the
case cannot be executed. Hence, a complaint filed against such a person should be dismissed for failure to
state a cause of action, as in the case at bar.
Under Art. 1768 of the Civil Code, a partnership “has a juridical personality separate and distinct from that
of each of the partners.” The partners cannot be held liable for the obligations of the partnership unless it is
shown that the legal fiction of a different juridical personality is being used for fraudulent, unfair, or illegal
purposes. In this case, Felicidad has not shown that A.C. Aguila & Sons, Co., as a separate juridical entity,
is being used for fraudulent, unfair, or illegal purposes. Moreover, the title to the subject property is in the
name of A.C. Aguila & Sons, Co. It is the partnership, not its officers or agents, which should be impleaded
in any litigation involving property registered in its name. A violation of this rule will result in the dismissal of
the complaint.
LORENZO OÑA V CIR
GR No. L -19342 | May 25, 1972 | J. Barredo
Facts:
Julia Buñales died leaving as heirs her surviving spouse, Lorenzo Oña and her five children. A civil case was
instituted for the settlement of her state, in which Oña was appointed administrator and later on the guardian of the
three heirs who were still minors when the project for partition was approved. This shows that the heirs have
undivided ½ interest in 10 parcels of land, 6 houses and money from the War Damage Commission.

Although the project of partition was approved by the Court, no attempt was made to divide the properties and they
remained under the management of Oña who used said properties in business by leasing or selling them and
investing the income derived therefrom and the proceeds from the sales thereof in real properties and securities. As
a result, petitioners’ properties and investments gradually increased. Petitioners returned for income tax purposes
their shares in the net income but they did not actually receive their shares because this left with Oña who invested
them.

Based on these facts, CIR decided that petitioners formed an unregistered partnership and therefore, subject to the
corporate income tax, particularly for years 1955 and 1956. Petitioners asked for reconsideration, which was denied
hence this petition for review from CTA’s decision.

Issue:
W/N there was a co-ownership or an unregistered partnership
W/N the petitioners are liable for the deficiency corporate income tax

Held:
Unregistered partnership. The Tax Court found that instead of actually distributing the estate of the deceased
among themselves pursuant to the project of partition, the heirs allowed their properties to remain under the
management of Oña and let him use their shares as part of the common fund for their ventures, even as they paid
corresponding income taxes on their respective shares.
Yes. For tax purposes, the co-ownership of inherited properties is automatically converted into an unregistered
partnership the moment the said common properties and/or the incomes derived therefrom are used as a common
fund with intent to produce profits for the heirs in proportion to their respective shares in the inheritance as
determined in a project partition either duly executed in an extrajudicial settlement or approved by the court in the
corresponding testate or intestate proceeding. The reason is simple. From the moment of such partition, the heirs
are entitled already to their respective definite shares of the estate and the incomes thereof, for each of them to
manage and dispose of as exclusively his own without the intervention of the other heirs, and, accordingly, he
becomes liable individually for all taxes in connection therewith. If after such partition, he allows his share to be held
in common with his co-heirs under a single management to be used with the intent of making profit thereby in
proportion to his share, there can be no doubt that, even if no document or instrument were executed, for the
purpose, for tax purposes, at least, an unregistered partnership is formed.
For purposes of the tax on corporations, our National Internal Revenue Code includes these partnerships —

The term “partnership” includes a syndicate, group, pool, joint venture or other unincorporated
organization, through or by means of which any business, financial operation, or venture is carried
on… (8 Merten’s Law of Federal Income Taxation, p. 562 Note 63; emphasis ours.)
with the exception only of duly registered general copartnerships — within the purview of the term “corporation.” It
is, therefore, clear to our mind that petitioners herein constitute a partnership, insofar as said Code is concerned,
and are subject to the income tax for corporations. Judgment affirmed.
G.R. L-68118 Obillos v. CIR
Facts:

In 1973, Jose Obillos completed payment on two lots located in Greenhills, San Juan. The next day, he transferred
his rights to his four children for them to build their own residences. The Torrens title would show that they were co-
owners of the two lots. However, the petitioners resold them to Walled City Securities Corporation and Olga Cruz
Canda for P313k or P33k for each of them. They treated the profit as capital gains and paid an income tax of
P16,792.00

The CIR requested the petitioners to pay the corporate income tax of their shares, as this entire assessment is based
on the alleged partnership under Article 1767 of the Civil Code; simply because they contributed each to buy the
lots, resold them and divided the profits among them.

But as testified by Obillos, they have no intention to form the partnership and that it was merely incidental since they
sold the said lots due to high demand of construction. Naturally, when they sell them as co-partners, it will result to
the share of profits. Further, their intention was to divide the lots for residential purposes.

Issue:

Was there a partnership, hence, they are subject to corporate income taxes?

Court Ruling:

Not necessarily. As Article 1769 (3) of the Civil Code provides: the sharing of gross returns does not in itself
establish a partnership, whether or not the persons sharing them have a joint or common right or interest in any
property from which the returns are derived. There must be an unmistakeable intention to form a partnership or
joint venture.

In this case, the Commissioner should have investigated if the father paid donor's tax to establish the fact that
there was really no partnership.
Pascual and Dragon v. CIR, G.R. No. 78133, October 18, 1988
[GANCAYCO, J.]
FACTS:
Petitioners bought two (2) parcels of land and a year after, they bought another three (3) parcels of land. Petitioners
subsequently sold the said lots in 1968 and 1970, and realized net profits. 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, the Acting BIR
Commissioner assessed and required Petitioners 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 asserting that they had availed of tax
amnesties way back in 1974. In a reply, 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 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.

ISSUE:
Whether the Petitioners should be treated as an unregistered partnership or a co-ownership for the purposes of income tax.

RULING:
The Petitioners are simply under the regime of co-ownership and not under unregistered partnership.
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 (Art. 1767, Civil Code of the Philippines). In the present
case, there is no evidence that petitioners entered into an agreement to contribute money, property or industry to a common
fund, and that they intended to divide the profits among themselves. 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. Hence, 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.
HEIRS OF JOSE LIM AND JULIET LIM G.R. NO. 172690 MARCH 3, 2010
In 1980, the heirs of Jose Lim alleged that Jose Lim entered into a partnership agreement with Jimmy Yu
and Norberto Uy. The three contributed P50,000.00 each and used the funds to purchase a truck to start
their trucking business. A year later however, Jose Lim died. The eldest son of Jose Lim, Elfledo Lim, took
over the trucking business and under his management, the trucking business prospered. Elfledo was able
to but real properties in his name. From one truck, he increased it to 9 trucks, all trucks were in his name
however. He also acquired other motor vehicles in his name.
In 1993, Norberto Uy was killed. In 1995, Elfledo Lim died of a heart attack. Elfledo’s wife, Juliet Lim, took
over the properties but she intimated to Jimmy and the heirs of Norberto that she could not go on with the
business. So the properties in the partnership were divided among them.
Now the other heirs of Jose Lim, represented by Elenito Lim, required Juliet to do an accounting of all
income, profits, and properties from the estate of Elfledo Lim as they claimed that they are co-owners
thereof. Juliet refused hence they sued her.
The heirs of Jose Lim argued that Elfledo Lim acquired his properties from the partnership that Jose Lim
formed with Norberto and Jimmy. In court, Jimmy Yu testified that Jose Lim was the partner and not Elfledo
Lim. The heirs testified that Elfledo was merely the driver of Jose Lim.
ISSUE: Who is the “partner” between Jose Lim and Elfledo Lim?
HELD: It is Elfledo Lim based on the evidence presented regardless of Jimmy Yu’s testimony in court that
Jose Lim was the partner. If Jose Lim was the partner, then the partnership would have been dissolved
upon his death (in fact, though the SC did not say so, I believe it should have been dissolved upon Norberto’s
death in 1993). A partnership is dissolved upon the death of the partner. Further, no evidence was
presented as to the articles of partnership or contract of partnership between Jose, Norberto and Jimmy.
Unfortunately, there is none in this case, because the alleged partnership was never formally organized.
But at any rate, the Supreme Court noted that based on the functions performed by Elfledo, he is the actual
partner.
The following circumstances tend to prove that Elfledo was himself the partner of Jimmy and Norberto:
1.) Cresencia testified that Jose gave Elfledo P50,000.00, as share in the partnership, on a date that
coincided with the payment of the initial capital in the partnership;
2.) Elfledo ran the affairs of the partnership, wielding absolute control, power and authority, without any
intervention or opposition whatsoever from any of petitioners herein;
3.) all of the properties, particularly the nine trucks of the partnership, were registered in the name of Elfledo;
4.) Jimmy testified that Elfledo did not receive wages or salaries from the partnership, indicating that what
he actually received were shares of the profits of the business; and
5.) none of the heirs of Jose, the alleged partner, demanded periodic accounting from Elfledo during his
lifetime. As repeatedly stressed in the case of Heirs of Tan Eng Kee, a demand for periodic accounting is
evidence of a partnership.
Furthermore, petitioners failed to adduce any evidence to show that the real and personal properties
acquired and registered in the names of Elfledo and Juliet formed part of the estate of Jose, having been
derived from Jose’s alleged partnership with Jimmy and Norberto.
Elfledo was not just a hired help but one of the partners in the trucking business, active and visible in the
running of its affairs from day one until this ceased operations upon his demise. The extent of his control,
administration and management of the partnership and its business, the fact that its properties were placed
in his name, and that he was not paid salary or other compensation by the partners, are indicative of the
fact that Elfledo was a partner and a controlling one at that. It is apparent that the other partners only
contributed in the initial capital but had no say thereafter on how the business was ran. Evidently it was
through Elfredo’s efforts and hard work that the partnership was able to acquire more trucks and otherwise
prosper. Even the appellant participated in the affairs of the partnership by acting as the bookkeeper sans
salary.
LILIBETH SUNGA-CHAN VS LAMBERTO CHAN G.R. 143340 AUGUST 15, 2001
In 1977, Chua and Jacinto Sunga verbally agreed to form a partnership for the sale and distribution of
Shellane LPGs. Their business was very profitable but in 1989 Jacinto died. Upon Jacinto’s death, his
daughter Lilibeth took over the business as well as the business assets. Chua then demanded for an
accounting but Lilibeth kept on evading him. In 1992 however, Lilibeth gave Chua P200k. She said that the
same represents a partial payment; that the rest will come after she finally made an accounting. She never
made an accounting so in 1992, Chua filed a complaint for “Winding Up of Partnership Affairs, Accounting,
Appraisal and Recovery of Shares and Damages with Writ of Preliminary Attachment” against Lilibeth.
Lilibeth in her defense argued among others that Chua’s action has prescribed.
ISSUE: Whether or not Chua’s claim is barred by prescription.
HELD: No. The action for accounting filed by Chua three (3) years after Jacinto’s death was well within the
prescribed period. The Civil Code provides that an action to enforce an oral contract prescribes in six (6)
years while the right to demand an accounting for a partner’s interest as against the person continuing the
business accrues at the date of dissolution, in the absence of any contrary agreement. Considering that the
death of a partner results in the dissolution of the partnership, in this case, it was after Jacinto’s death that
Chua as the surviving partner had the right to an account of his interest as against Lilibeth. It bears stressing
that while Jacinto’s death dissolved the partnership, the dissolution did not immediately terminate the
partnership. The Civil Code expressly provides that upon dissolution, the partnership continues and its
legal personality is retained until the complete winding up of its business, culminating in its termination.

TOCAO V. CA
G.R. No. 127405; October 4, 2000
Ponente: J. Ynares-Santiago

FACTS:

Private respondent Nenita A. Anay met petitioner William T. Belo, then the vice-president for
operations of Ultra Clean Water Purifier, through her former employer in Bangkok. Belo introduced
Anay to petitioner Marjorie Tocao, who conveyed her desire to enter into a joint venture with her for
the importation and local distribution of kitchen cookwares

Under the joint venture, Belo acted as capitalist, Tocao as president and general manager, and
Anay as head of the marketing department and later, vice-president for sales

The parties agreed that Belo's name should not appear in any documents relating to their
transactions with West Bend Company. Anay having secured the distributorship of cookware products
from the West Bend Company and organized the administrative staff and the sales force, the
cookware business took off successfully. They operated under the name of Geminesse Enterprise, a
sole proprietorship registered in Marjorie Tocao's name.

The parties agreed further that Anay would be entitled to:

(1) ten percent (10%) of the annual net profits of the business;
(2) overriding commission of six percent (6%) of the overall weekly production;
(3) thirty percent (30%) of the sales she would make; and
(4) two percent (2%) for her demonstration services. The agreement was not reduced to writing on
the strength of Belo's assurances that he was sincere, dependable and honest when it came to
financial commitments.

On October 9, 1987, Anay learned that Marjorie Tocao had signed a letteraddressed to the
Cubao sales office to the effect that she was no longer the vice-president of Geminesse Enterprise.

Anay attempted to contact Belo. She wrote him twice to demand her overriding commission for
the period of January 8, 1988 to February 5, 1988 and the audit of the company to determine her
share in the net profits.

Anay still received her five percent (5%) overriding commission up to December 1987. The following
year, 1988, she did not receive the same commission although the company netted a gross sales of P
13,300,360.00.

On April 5, 1988, Nenita A. Anay filed Civil Case No. 88-509, a complaint for sum of money with
damages against Marjorie D. Tocao and William Belo before the Regional Trial Court of Makati, Branch
140

The trial court held that there was indeed an "oral partnership agreement between the plaintiff
and the defendants. The Court of Appeals affirmed the lower court’s decision.

ISSUE:
Whether the parties formed a partnership

HELD:

Yes, the parties involved in this case formed a partnership

The Supreme Court held that to be considered a juridical personality, a partnership must fulfill these
requisites:

(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. It may be
constituted in any form; a public instrument is necessary only where immovable property or real
rights are contributed thereto.

This implies that since a contract of partnership is consensual, an oral contract of partnership
is as good as a written one.

In the case at hand, Belo acted as capitalist while Tocao as president and general manager, and
Anay as head of the marketing department and later, vice-president for sales. Furthermore, Anay was
entitled to a percentage of the net profits of the business.

Therefore, the parties formed a partnership.

 LITONJUA VS LITONJUA G.R. 166299-300 DEC. 13, 2005

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 Eduardo’s 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 Aurelio’s 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.
Agad vs mabato L-24193 June 18, 1968

CONCEPCION, C.J.:
In this appeal, taken by plaintiff Mauricio Agad, from an order of dismissal of the Court of First Instance
of Davao, we are called upon to determine the applicability of Article 1773 of our Civil Code to the contract of
partnership on which the complaint herein is based.
Alleging that he and defendant Severino Mabato are - pursuant to a public instrument dated August 29, 1952,
copy of which is attached to the complaint as Annex "A" - partners in a fishpond business, to the capital of
which Agad contributed P1,000, with the right to receive 50% of the profits; that from 1952 up to and including
1956, Mabato who handled the partnership funds, had yearly rendered accounts of the operations of the
partnership; and that, despite repeated demands, Mabato had failed and refused to render accounts for the
years 1957 to 1963, Agad prayed in his complaint against Mabato and Mabato & Agad Company, filed on June
9, 1964, that judgment be rendered sentencing Mabato to pay him (Agad) the sum of P14,000, as his share in
the profits of the partnership for the period from 1957 to 1963, in addition to P1,000 as attorney's fees, and
ordering the dissolution of the partnership, as well as the winding up of its affairs by a receiver to be
appointed therefor.
In his answer, Mabato admitted the formal allegations of the complaint and denied the existence of said
partnership, upon the ground that the contract therefor had not been perfected, despite the execution of Annex
"A", because Agad had allegedly failed to give his P1,000contribution to the partnership
capital. Mabato prayed, therefore, that the complaint be dismissed; that Annex "A" be declared void abinitio;
and that Agad be sentenced to pay actual, moral and exemplary damages, as well as attorney's fees.
Subsequently, Mabato filed a motion to dismiss, upon the ground that the complaint states no cause of action
and that the lower court had no jurisdiction over the subject matter of the case, because it involves principally
the determination of rights over public lands. After due hearing, the court issued the order appealed from,
granting the motion to dismiss the complaint for failure to state a cause of action. This conclusion was
predicated upon the theory that the contract of partnership, Annex "A", is null and void, pursuant to Art. 1773
of our Civil Code, because an inventory of the fishpond referred in said instrument had not been attached
thereto. A reconsideration of this order having been denied, Agad brought the matter to us for review by
record on appeal.
Articles 1771 and 1773 of said Code provide:
"Art. 1771. A partnership may be constituted in any form, except where immovable property or real rights are
contributed thereto, in which case a public instrument shall be necessary.
"Art. 1773. A contract of partnership is void, whenever immovable property is contributed thereto, if inventory
of said property is not made, signed by the parties, and attached to the Public instrument."
The issue before us hinges on whether or not "immovable property or real rights" have been contributed to the
partnership under consideration. Mabato alleged and the lower court held that the answer should be in the
affirmative, because "it is really inconceivable how a partnership engaged in the fishpond business could exist
without said fishpond property (being) contributed to the partnership." It should be noted, however, that, as
stated in Annex "A" the partnership was established "to operate a fishpond", not to" engage in a fishpond
business". Moreover, none of the partners contributed either a fishpond or a real right to any fishpond. Their
contributions were limited to the sum of P1,000 each. Indeed, Paragraph 4 of the Annex "A" provides:
"That the capital of the said partnership is Two Thousand (P2,000.00) Pesos Philippine Currency, of which
One Thousand (P1,000.00) pesos has been contributed by Severino Mabato and One Thousand (P1,000.00)
Pesos has been contributed by Mauricio Agad.
The operation of the fishpond mentioned in Annex "A" was the purpose of the partnership. Neither said
fishpond nor a real right thereto was contributed to the partnership or became part of the capital thereof, even
if a fishpond or a real right thereto could become part of its assets.
WHEREFORE, we find that said Article 1773 of the Civil Code is not in point and that, the order appealed
from should be, as it is hereby set aside and the case remanded to the lower court for further proceedings, with
the costs of this instance against defendant-appellee, Severino Mabato. IT IS SO ORDERED.
TORRES VS CA G.R. NO. 134559 DEC. 9, 1999
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 what’s 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 Manuel’s 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.