Pioneer Insurance & Surety Corporation vs Court of Appeals

November 18, 2012

175 SCRA 668
Business Organization – Corporation Law – When De Facto Partnership Does Not
Exist

Principle: There was no de facto partnership. Ordinarily, when co-investors

agreed to do business through a corporation but failed to incorporate, a de
facto partnership would have been formed, and as such, all must share in the
losses and/or gains of the venture in proportion to their contribution. But in
this case, it was shown that Lim did not have the intent to form a corporation
with Maglana et al. This can be inferred from acts of unilaterally taking out a
surety from Pioneer Insurance and not using the funds he got from Maglana et
al. The record shows that Lim was acting on his own and not in behalf of his
other would-be incorporators in transacting the sale of the airplanes and spare
parts.