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MAURO LOZANA, public policy such as to make the contract of partnership, null and void ab

plaintiff-appellee,-versus- initio.
SERAFIN DEPAKAKIBO, The agreement could have been submitted to the Public Service Commission
defendant-appellant. if the rules of the latter require them to be so presented. But the fact of
LABRADOR, furnishing the current to the holder of the franchise alone, without the previous
J approval of the Public Service Commission, does not per se make the
.: contract of partnership null and void from the beginning and render the
Lozana entered into a partnership with Depakakibo wherein they established partnership entered into by the parties for the purpose also void and non-
a capital of P30,000, Lozana furnishing 60%and Depakakibo, 40%, for the existent. Under the circumstances, therefore, the court erred in declaring that
purpose of maintaining, operating and distributing electric light and power in the contract was illegal from the beginning and that parties to the partnership
the Municipality of Dumangas, under a franchise issued to Mrs. Piadosa are not bound therefor, such that the contribution of the plaintiff to the
Buenaflor. However, the franchise or certificate of public necessity and partnership did not pass to it as its property. It also follows that the claim of the
convenience in favor of Buenaflor was cancelled and revoked by the Public defendant in his counterclaim that the partnership be dissolved and its assets
Service Commission on May 15, 1955. But the decision of the Public Service liquidated is the proper remedy, not for each contributing partner to claim back
Commission was appealed to SC and a temporary certificate of public what he had contributed.
convenience was issued in the name of Olimpia D. Decolongon. Evidently
because of the cancellation of thefranchise in the name of Buenaflor, Lozana
sold a generator to Decolongon in 1955. Depakakibo, on the other hand, sold
one Crossly Diesel Engine, to the spouses Felix Jimenea and Felina Harder in MAXIMILIANO SANCHO, vs. SEVERIANO LIZARRAGA
1956.Lozana brought an action against Serafin, alleging that he is the owner of G.R.No. L-33580 February 6, 1931
the Generator Buda (Diesel), valued at P8,000and 70 wooden posts with the Subject: BusOrg 1
wires connecting the generator to the different houses supplied by electric FACTS:
current in the municipality, and that he is entitled to the possession thereof, but The plaintiff brought an action for the rescission of the partnership contract
that Serafin has wrongfully detained them as a consequence of which Lozana between himself and the defendant and the reimbursement of his investment
suffered damages. He prayed that said properties be delivered back to him. worth 50,000php with interest at 12 per cent per annum form October 15,
Judge Pelayoissued an order in said case authorizing the sheriff to take 1920, with costs, and any other just and equitable remedy against said
possession of the generator and 70 wooden posts, upon plaintiff’s filing of a defendant. The defendant denies generally and specifically all the allegations
bond in favor of the defendant (for subsequent delivery to the plaintiff).Serafin of the complaint and asked for the dissolution of the partnership, and the
denied that the generator and the equipment mentioned in the complaint payment to him as its manager and administrator P500 monthly from October
belong to the plaintiff and alleging that the same had been contributed by the 15, 1920 until the final dissolution with interest.
plaintiff to the partnership entered into between them in the same manner that
defendant had contributed equipments also, and therefore that he is not
unlawfully detaining them. Defendant alleged that under the partnership The CFI found that the defendant had not contributed all the capital he had
agreement the parties were to contribute equipments, plaintiff contributing the bound himself to invest hence it demanded that the defendant liquidate the
generator and the defendant, the wires for the purpose of installing the main partnership, declared it dissolved on account of the expiration of the period for
and delivery lines; that the plaintiff sold his contribution to the partnership, in which it was constituted, and ordered the defendant, as managing partner, to
violation of the terms of their agreement. The judge entered a decision proceed without delay to liquidate it, submitting to the court the result of the
declaring plaintiff owner of the equipment and entitled to the possession liquidation together with the accounts and vouchers within the period of thirty
thereof, with costs against defendant. It is against this judgment that the days from receipt of notice of said judgment. The plaintiff appealed from said
defendant has appealed. decision praying for the rescission of the partnership contract between him and
Issue: the defendant in accordance with Art. 1124.
W/N Lozana violated the partnership agreement.
Held:
ISSUE:
Yes.
WON plaintiff acquired the right to demand rescission of the partnership
Ratio:
contract according to article 1124 of the Civil Code.
As it appears that the plaintiff and the defendant entered into the contract
of partnership, plaintiff contributing the amount of P18,000, and as it is not
stated therein that there has been a liquidation of the partnership assets at HELD:
the time plaintiff sold the Buda Diesel Engine on October 15, 1955, and since The SC ruled that owing to the defendant’s failure to pay to the partnership the
the court below had found that the plaintiff had actually contributed one engine whole amount which he bound himself to pay, he became indebted to the
and 70 posts to the partnership, it necessarily follows that the Buda diesel partnership for the remainder, with interest and any damages occasioned
engine contributed by the plaintiff had become the property of the partnership. thereby, but the plaintiff did not thereby acquire the right to demand rescission
As properties of the partnership, the same could not be disposed of by the of the partnership contract according to article 1124 of the Code. Article 1124
party contributing the same without the consent or approval of the partnership cannot be applied to the case in question, because it refers to the resolution of
or of the other partner. The lower court declared that the contract of obligations in general, whereas articles 1681 and 1682 specifically refer to the
partnership was null and void, because by the contract of partnership, the contract of partnership in particular. And it is a well known principle that
parties thereto have become dummies of the owner of the franchise. The Anti- special provisions prevail over general provisions. Hence, SC dismissed the
Dummy law has not been violated as parties plaintiff and defendant are not appeal left the decision appealed from in full force.
aliens but Filipinos. Upon examining the contract of partnership, especially the
provision thereon wherein the parties agreed to maintain, operate and
distribute electric light and power under the franchise belonging to Mrs.
Buenaflor, we do not find the agreement to be illegal, or contrary to law and
UY V. PUZON79 SCRA 598
A partner in a construction venture who failed to standby his commitment to
the partnership will be ordered to reimburse to his co-partner whatever the Choithram in turn decided to invest in the real estate business. He bought the
latter invested and spent for the projects of the venture 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
RAMNANI v. CA other buildings on the property. He rented them out and collected the rentals.
Through the industry and genius of Choithram, Ishwar's property was
196 scra 731; May 7, 1991 developed and improved into what it is now.

Ponente: J. Gancayco Justice and equity dictate that the two share equally the fruit of their
joint investment and efforts. Perhaps this Solomonic solution may pave the
FACTS: way towards their reconciliation. Both would stand to gain. No one would end
up the loser. After all, blood is thicker than water.
Ishwar, Choithram and Navalrai, all surnamed Jethmal Ramnani, are
brothers of the full blood. Ishwar and his spouse Sonya had their main
business based in New York. Realizing the difficulty of managing their
investments in the Philippines they executed a general power of attorney on DAN FUE LEUNG, petitioner,vs.HON. INTERMEDIATE APPELLATE COURT
January 24, 1966 appointing Navalrai and Choithram as attorneys-in-fact, and LEUNG YIU, respondents.
empowering them to manage and conduct their business concern in the
Philippines FACTS:
The petitioner asks for the reversal of the decision of the Appellate Court in
On February 1, 1966 and on May 16, 1966, Choithram entered into two which affirmed the decision of the lower court declaring private respondent
agreements for the purchase of two parcels of land located in Barrio Ugong, Leung Yiu a partner of petitioner Dan Fue Leung in the business of Sun Wah
Pasig, Rizal, from Ortigas & Company, Ltd. Partnership. A building was Panciteria and ordering the petitioner to pay to the private respondent his
constructed thereon by Choithram in 1966. Three other buildings were built share in the annual profits of the said restaurant. This case originated from a
thereon by Choithram through a loan of P100,000.00 obtained from the complaint filed by respondent Leung Yiu with the lower court to recover the
Merchants Bank as well as the income derived from the first building. 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
Sometime in 1970 Ishwar asked Choithram to account for the income and Fue Leung.The Sun Wah Panciteria was registered as a single proprietorship
expenses relative to these properties during the period 1967 to 1970. and its licenses and permits were issued to and infavor of petitioner Dan Fue
Choithram failed and refused to render such accounting. Thereafter, Ishwar Leung as the sole proprietor. Respondent Leung Yiu adduced evidence during
revoked the general power of attorney. Choithram and Ortigas were duly the trial of the case to show that Sun Wah Panciteria was actually a
notified of such revocation on April 1, 1971 and May 24, 1971, respectively. partnership and that he was one of the partners having contributed P4,000.00
Said notice was also registered with the Securities and Exchange Commission to its initial establishment.Lower court ruled in favor of the private respondent.
on March 29, 1971 and was published in the April 2, 1971 issue of The Manila Petitioner appealed the trial court's amended decision. However, the
Times for the information of the general public. questioned decision was further modified and affirmed by the appellate court.
Both the trial court and the appellate court declared that the private petitioner
Nevertheless, Choithram, transferred all rights and interests of Ishwar and
is a partner and is entitled to a share of the annual profits of the restaurant.
Sonya in favor of his daughter-in-law, Nirmla Ramnani, on February 19, 1973.
Hence, an appeal to the SC.The petitioner argues that private respondent
extended 'financial assistance ‘to herein petitioner at the time of the
On October 6, 1982, Ishwar and Sonya filed a complaint against Choitram
establishment of the Sun Wah Panciteria, in return of which private respondent
and/or spouses Nirmla and Moti and Ortigas for reconveyance of said
allegedly will receive a share in the profits of the restaurant. It was, therefore,
properties or payment of its value and damages.
error for the Appellate Court to interpretor construe 'financial assistance' to
mean the contribution of capital by a partner to a partnership.
ISSUE:

Whether Ishram can recover the entire properties subject in the ISSUE:WON the private respondent is a partner of the petitioner in the
ligitation establishment of Sun Wah Panciteria.

HELD: HELD:In essence, the private respondent alleged that when Sun Wah
Panciteria was established, he gave P4,000.00 to thepetitioner with the
No, Ishram cannot recover the entire properties subject. understanding that he would be entitled to twenty-two percent (22%) of the
annual profit derivedfrom the operation of the said panciteria. These
The Supreme Court held that despite the fact that Choithram, et al., allegations, which were proved, make the private respondent and thepetitioner
have committed acts which demonstrate their bad faith and scheme to defraud partners in the establishment of Sun Wah Panciteria because Article 1767 of
spouses Ishwar and Sonya of their rightful share in the properties in litigation, the Civil Code provides that"By the contract of partnership two or more
the Court cannot ignore the fact that Choithram must have been motivated by persons bind themselves to contribute money, property or industry to
a strong conviction that as the industrial partner in the acquisition of said acommon fund, with the intention of dividing the profits
assets he has as much claim to said properties as Ishwar, the capitalist among themselves".Therefore, the lower courts did not err in construing the
partner in the joint venture. complaint as one wherein the private respondent asserted hisrights as partner
of the petitioner in the establishment of the Sun Wah Panciteria,
notwithstanding the use of the termfinancial assistance therein.SC affirmed proportion to the capitalput in by each group.12. During the course divided, but
appellate court¶s decision and ordered the dissolution of the partnership. the partners were given theelection, as evidenced by the statements of
accounts referredto in the decision of the Court of Appeals, to invest
theirrespective shares in such profits as additional capital.13. The petitioners
accordingly let a greater part of theirprofits as additional investment in the
Sison v. Helen McQuaid December 29, 1953 partnership.14. After twenty years the business had grown to such anextent
that is total value, including profits, amounted toP44,618.67.15. Statements of
Principle: Liquidation shall happen before a partner may claim his share of accounts were periodically prepared by thepetitioners and sent to the
profit from the partnership. respondents who invariably did notmake any objection thereto.

Facts:Plaintiff brought an action in the CFI against defendant. Defendant 16. Before the last statement of accounts was made, therespondents had
borrowed from him money (P 2,210) to enable her to payher obligations and to received P5,387.29 by way of profits.17. The last and final statement of
add to her capital in her lumber business. She could not pay so she proposed accounts, dated May 27,1932, and prepared by the petitioners after the
to take plaintiff as apartner in her business, plaintiff to contribute the P 2,210 respondentshad announced their desire to dissolve the partnership,18.
due him from defendant.Before the last World War, the partnership sold Pursuant to the request contained in this letter, thepetitioners remitted and
230,000‐board ft. of lumbe rto the US Army for P 13,800.00. paid to the respondents the totalamount corresponding to them under the
Defendantrefused to deliver ½ of it (P 6,900.00) to plaintiff despite his above-quotedstatement of accounts which, however, was not signed by
repeated demands. Plaintiff filed an action to compel defendant topay him his thelatter.19. Thereafter the complaint in this case was filed by therespondents,
half of the profit from the partnership.The case was dismissed upon the ground praying for an accounting and final liquidation ofthe assets of the
of prescription. partnership.20. The Court of First Instance of Manila held that the lastand final
statement of accounts prepared by the petitioners wastacitly approved and
Issue: Whether or not plaintiff is entitled to the sum he claims accepted by the respondents who, byvirtue of the above-quoted letter of
Father Mariano Lasala, losttheir right to a further accounting from the moment
Held: theyreceived and accepted their shares as itemized in saidstatement.21. This
NO. Order of dismissal was affirmed, but on the ground that the judgment was reversed by the Court of Appealsprincipally on the ground that
complaint states no cause of action.Ratio: It is not clear from the complaint just as the final statement of accountsremains unsigned by the respondents, the
when the cause of action accrued. Thus the dismissal of the case is same standsdisapproved.22. The decision appealed by the petitioners
erroneous.However order should be retained on the ground that the complaint
has no cause of action. Plaintiff seeks to recover fromdefendant one-half of the ISSUES:(1) WoN the accounting stated in the letter including the last andfinal
purchase price of lumber sold by the partnership to the United States Army. statement of account was tacitly accepted by thepetitioners as the final
But his complaint doesnot show why he should be entitled to the sum he liquidation and accounting of the assetsof the partnership?
claims. It does not allege that there has been a liquidation of the
partnershipbusiness and the said sum has been found to be due him as his (2) Are there really mistakes and misrepresentations made in thestatement of
share of the profits. The proceeds from the sale of a certainamount of lumber accounts made?
cannot be considered profits until costs and expenses have been deducted.
Moreover, the profits of thebusiness cannot be determined by taking into Petitioners’ contention:
account the result of one particular transaction instead of all the To support a plea of a stated account so as toconclude the parties in relation
transactionshad. Hence, the need for a general liquidation before a member of to all dealings between them, theaccounting must be shown to have been
a partnership may claim a specific sum as his share of theprofits. final. (1 Cyc. 366.) All thefirst nine statements which the defendants sent the
plaintiffs werepartial settlements, while the last, although intended to be final,
hasnot been signed.

HELD FOR ISSUE NO. 1: YES. SC stated that the last and finalstatement of
ORNUM v. LASALA1.
accounts hereinabove quoted, had been approved bythe respondents.
In 1908 Pedro Lasala, father of the respondents, andEmerenciano Ornum
formed a partnership2. Lasala as capitalist while Ornum will be the industrial
This approval resulted, by virtue of the letter of Father MarianoLasala of July
partner3. Lasala delivered the sum of P1,000 to Ornum who will conducta
19, 1932, quoted in part in the appealed decisionfrom the failure of the
business at his place of residence in Romblon.4. In 1912, when the assets of
respondents to object to the statementand from their promise to sign the same
the partnership consisted ofoutstanding accounts and old stock of
as soon as theyreceived their shares as shown in said statement.
merchandise,Emerenciano Ornum, following the wishes of his wife, asked
forthe dissolution of the Lasala, Emerenciano5. Ornum looked for some one
After such shares had been paid by the petitioners andaccepted by the
who could take his place and hesuggested the names of the petitioners who
respondents without any reservation, theapproval of the statement of accounts
accordinglybecame the new partners.6. Upon joining the business, the
was virtually confirmedand its signing thereby became a mere formality to be
petitioners, contributed P505.54as their capital7. the new partnership Pedro
compliedwith by the respondents exclusively. Their refusal to sign,
Lasala had a capital of P1,000,appraised value of the assets of the former
afterreceiving their shares, amounted to a waiver to that formality infavor of the
partnership, plusthe said P505.54 invested by the petitioners who, as
petitioners who has already performed theirobligation.
industrialpartners, were to run the business in Romblon.8. After the death of
Pedro Lasala, his children (the respondents)succeeded to all his rights and
This approval precludes any right on the part of therespondents to a further
interest in the partnership.9. The partners never knew each other
liquidation, unless the latter can showthat there was fraud, deceit, error or
personally.10. No formal partnership agreement was ever executed.11. The
mistake in said approval.(Pastor,
petitioners, as managing partners, were receivedone-half of the net gains, and
vs.
the other half was to be dividedbetween them and the Lasala group in
Nicasio, 6 Phil., 152; Aldecoa & Co.,
vs. Yes, Abad Santos is entitled to see the partnership books.
Warner,Barnes & Co., 16 Phil., 423; Gonsalez
vs. The Supreme Court ruled that according to
Harty, 32 Phil. 328.)The Court of Appeals did not make any findings that there
wasfraud, and on the matter of error or mistake it merely said: ART. 1299. Any partner shall have the right to a formal account as to
partnership affairs:
HELD FOR ISSUE NO. 2: the pronouncement that the evidencetends to prove
that there were mistakes in the petitioners' statementsof accounts, without (1)If he is wrongfully excluded from the partnership business or possession of
specifying the mistakes, merely intimates assuspicion and is not such a its property by his co-partners;
positive and unmistakable finding of factas to justify a revision, especially (2)If the right exists under the terms of any agreement;
because the Court of Appeals hasrelied on the bare allegations of the parties, (3)As provided by article 1807;
Moreover, as thepetitioners did not appeal from the decision of the Court (4)Whenever other circumstances render it just and reasonable."
abandonedsuch allegation in the Court of Appeals.
In the case at hand, the company is stopped from denying Abad Santos as an
no justifiable reason (fraud, deceit, error or mistake) has beenpositively and industrial partner because it has been 8 years and the company never
unmistakably found by the Court of Appeals so as to warrant the liquidations corrected their agreement in order to show their true intentions. The company
sought by the respondents. In justice to the petitioners never bothered to correct those up until Abad Santos filed a complaint.

It should be borne in mind that this case has been pending fornearly nine ISSUE: Whether or not Abad Santos is an industrial partner and is entitled to
years and that, if another accounting is ordered, acostly action or proceeding the shares of the partnership?
may arise which may not bedisposed of within a similar period, it is not
improbable that theintended relief may in fact be the respondents' funeral. HELD: Yes. It is not disputed that the provision against the industrial partner
engaging in business for himself seeksto prevent any conflict of interest
between the industrial partner and the partnership, and to insure
EVANGELISTA & CO. v. ABAD SANTOS faithfulcompliance by said partner with this prestation. That appellee
EVANGELISTA & CO. v. ABAD SANTOS has faithfully complied with her prestation withrespect to appellants is clearly
G.R. No. L-31684; June 28, 1973 shown by the fact that it was only after filing of the complaint in this case and
Ponente: J. Makalintal theanswer thereto appellants exercised their right of exclusion under the codal
art just mentioned by alleging in their Supplemental Answer, subsequent to the
FACTS: filing of defendants' answer to the complaint, defendants reached
anagreement whereby the herein plaintiff been excluded from, and deprived
On October 9, 1954 a co-partnership was formed under the name of of, her alleged share, interests or participation, as an alleged industrial partner,
"Evangelista & Co." On June 7, 1955 the Articles of Co-partnership were in the defendant partnership and/or in its net profits or income, on theground
amended so as to include herein respondent, Estrella Abad Santos, as plaintiff has never contributed her industry to the partnership, instead she has
industrial partner, with herein petitioners Domingo C. Evangelista, Jr., been and still is a judge of theCity Court (formerly Municipal Court) of the
Leonarda Atienza Abad Santos and Conchita P. Navarro, the original capitalist City of Manila, devoting her time to performance of her duties as suchjudge
partners, remaining in that capacity, with a contribution of P17,500 each and enjoying the privilege and emoluments appertaining to the said office,
aside from teaching in law schoolin Manila, without the express consent of the
On December 17, 1963 herein respondent filed suit against the three herein defendants'. Having always knows as a appellee as a City judge even
other partners, alleging that the partnership, which was also made a party- before she joined appellant company as an industrial partner, why did it take
defendant, had been paying dividends to the partners except to her; and that appellants many yearn before excluding her from said company
notwithstanding her demands the defendants had refused and continued to as aforequoted allegations? And how can they reconcile such exclusive with
refuse to let her examine the partnership books or to give her information their main theory that appellee has never been such a partner because "The
regarding the partnership affairs or to pay her any share in the dividends real agreement was to grant the appellee ashare of 30% of the net profits
declared by the partnership which the appellant partnership may realize from June 7, 1955, until the
mortgage of P30,000.00 obtained from the Rehabilitation Finance Corporal
The defendants, in their answer, denied ever having declared dividends shall have been fully paid.
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 Carmen Liwanag v. CA and People
not express the true agreement of the parties, which was that the plaintiff was G.R. No. 114398 October 24, 1997
not an industrial partner; that she did not in fact contribute industry to the Romero, J.
partnership. Facts:

ISSUE: Liwanag asked Isidora Rosales to join her and Thelma Tagbilaran in the
business of buyingand selling cigarettes. Under their agreement, Rosales
Whether Abad Santos is entitled to see the partnership books because would give the money needed
she is an industrial partner in the partnership tobuy the cigarettes while Liwanag and Tabligan would act as her agents, with
acorresponding 40% commission to her if the goods are sold; otherwise the
HELD: money wouldbe returned to Rosales.
Rosales gave several cash advances amounting to 633,650. CFI rendered decision ordering Ong Pong Co to return toMARTINEZ one-half
of the capital of P1,500 (P750) plus P90 as one-half of the profits, calculated at
Money was misappropriated. Rosales files a complaint of estafa against them. the rate of 12% per annumfor the six months that the store was supposed to
Issue: have been open(total of P840) with legal interest of 6% until the full
1. WON the parties entered into a partnership agreement; 2. if in the negative, payment,with costs hence, this appeal by Ong Pong Co
WONthe transaction is a simple loan
Held: ISSUE:
1. No. Even assuming that a contract of partnership was indeed entered into WON MARTINEZ is entitled to the capital hecontributed to the partnership
by andbetween the parties, when money or property have been received by a
partner for a specificpurpose and he later misappropriated it, such partner is HELD:
guilty of estafa.2. No. In a contract of loan once the money is received by the YES. The ONGS failed to fulfill their obligation as partners who, acting as
debtor, ownership over thesame is transferred. Being the owner, the borrower MARTINEZ’s agents in receiving money, did not render proper accounting
can dispose of it for whatever purposehe may deem proper. therefor. Such renders them jointly liable for the losses, solidarity not having
been established.CFI decision is AFFRIMED in this regard but REVERSED
inasmuchas it found that the capital invested earned profits. Thus, the
CFIruling awarding MARTINEZ another P840 is DELETED. Ong PongCo is
CATALAN vs. GATCHALIAN only liable to pay MARTINEZ half of the capital, or P750,representing half of
the loss which both ONGS should jointly
105 Phil 1270, G.R. No. L-11648, April 22, 1959 beardue to their omission, to earn legal interest of 6% from time of filing this
complaint, and costs
FACTS:
Catalan and Gatchalian are partners. They mortgaged two lots to Dr. Marave RATIO:
together with the improvements thereon to secure a credit from the latter. The
partnership failed to pay the obligation. The properties were sold to Dr. Marave
at a public auction. Catalan redeemed the property and he contends that title In his defense, Ong Pong Co raised the issue of the closure/failureof the store
should be cancelled and a new one must be issued in his name. by virtue of ejectment proceedings instituted against them. THIS, however, has
no real significance in thedetermination of the merits of this case
ISSUE:
To be sure, the whole action is based upon the fact that the ONGSreceived
Did Catalan’s redemp capital from MARTINEZ for the purpose of organizing astore. The ONGS,
tion of the properties make him the absolute owner of the lands? according to the agreement, were to handle thesaid money and invest it in a
store which was the object of theassociation
HELD:
No. Under Article 1807 of the NCC every partner becomes a trustee for his The ONGS had no special agreement vesting in one sole personthe
copartner with regard to any benefits or profits derived from his act as a management of the business. Thus, both ONGS were theactual administrators
partner. Consequently, when Catalan redeemed the properties in question, he thereof; and as such administrators, theywere the agents of the company and
became a trustee and held the same in trust for his co partner Gatchalian, incurred the liabilitiespeculiar to every agent, among which is that of rendering
subject to his right to demand from the latter his contribution to the amount of account to the principal of their transactions, and paying him everythingthey
redemption may have received by virtue of the mandatum

Since neither of them has rendered such account nor proven thelosses, they
are therefore obliged to refund the money that theyreceived for the purpose of
establishing the said store
MARTINEZ v. ONG PONG CO Arellano, CJ (1910)
There is no evidence presented that the entire capital or any part thereof was
lost. Without proof, the allegation that the effects of the store were ejected is,
MARTINEZ delivered to Ong Pong Co and Ong Lay (ONGS) thesum of
as earlier mentioned, of no moment.Even if we assume this to be true, it could
P1,500. The ONGS, in a private document, acknowledged that they had
still not be inferred that the ejectment was due to the fact that no rents were
received the money with the agreement that theywill invest it in a store, and
paid, andthat the rent was not paid on account of the loss of the
the profits or losses therefrom was tobe divided with MARTINEZ in equal
capitalbelonging to the partnership
shares

With regard to the CFI’s finding of profits, it appears that the same was based
Later, MARTINEZ filed a complaint in order to compel the ONGSto render him
on the statements of Ong Pong Co, to the effect that "there were some profits,
an accounting of the partnership, or else to refundhim the P1,500 that he had
but not large ones." this,however, was never proven. And even we admit the
given them
same, suchstatement still does not make it possible to estimate the
alleged“profits.” As such, the CFI ruling on this point is REVERSED
Ong Pong Co alone appeared to answer the complaint. Headmitted the fact of
the agreement, but he alleged that Ong Lay(deceased) was the one who had
Inasmuch as in this case nothing appears other than the failure tofulfill an
managed the business, and that nothing had resulted therefrom except the
obligation on the part of a partner who acted as agent inreceiving money for a
loss of the capital of P1,500, to which loss MARTINEZ agreed to bear
given purpose, for which he has renderedno accounting, such agent is
responsible only for the losseswhich, by a violation of the provisions of the law,
he incurred.This being an obligation to pay in cash, there are no other
lossesthan the legal interest, which interest is not due except from thetime of On the theory on which the action was disposed of, the trialcourt committed no
the judicial demand, or, in the present case, from the filingof the complaint error in the computation of the variousshares.

Art. 1688 is NOT applicable in this case, in so far as it provides"that the Of the four parties plaintiff, but one, Victor del Rosario, isinterested in this
partnership is liable to every partner for the amounts hemay have disbursed on appeal, which has been dismissed as to theothers, and as to him the judgment
account of the same and for the properinterest," for the reason that no other of the trial court must beaffirmed, with costs of this instance
money than that contributed as is involvedArt. 1138, CC is also NOT
applicable here as this deals with debtsof a partnership where the obligation is
NOT joint. Likewise, Art 1723 regarding the liability of two or more agents with
respect tothe return of the money that they received from their principal isNOT PIONEER VS CA
applicable. No showing of solidarity having beenestablished, their liability is
JOINT Jacob Lim was the owner of Southern Air Lines, a single proprietorship. In 1965,
Lim convinced Constancio Maglana, Modesto Cervantes, Francisco Cervantes,
and Border Machinery and Heavy Equipment Company (BORMAHECO) to
Agustin v. Inocencio contribute funds and to buy two aircrafts which would form part a corporation
FACTS: which will be the expansion of Southern Air Lines. Maglana et al then contributed
The parties, who had been conducting a partnership asindustrial partners and delivered money to Lim.
without capital, contributed from its profitsthe sum of P807.28 as a fund toward But instead of using the money given to him to pay in full the aircrafts, Lim,
the construction of a cascofor use in their business, to which they added without the knowledge of Maglana et al, made an agreement with Pioneer
P3,500, borrowedfrom Maria del Rosario, the wife of Inocencio, he being Insurance for the latter to insure the two aircrafts which were brought in
themanaging partner. It is admitted that this total (a little overP4,300), was the installment from Japan Domestic Airlines (JDA) using said aircrafts as security.
estimated cost of the casco but in the progressof the work Inocencio found that So when Lim defaulted from paying JDA, the two aircrafts were foreclosed by
it called for additional funds,which he advanced to the amount of P2,024.49. Pioneer Insurance.
This amount isnecessary in order to complete the work undertaken. Although it It was established that no corporation was formally formed between Lim and
would seem that he failed to notify his partners of the variousitems from time to Maglana et al.
time going to make up this sum, it is shownthat the books were at all times
open to their inspection, and that,being asked to examine them, they omitted ISSUE: Whether or not Maglana et al must share in the loss as general partners.
to do so, and that theAgustin, representing all the partners, was also present
at theconstruction of the casco, in charge of the practical work andcognizant of HELD: No. There was no de facto partnership. Ordinarily, when co-investors
its needs and its progress. 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
ISSUE/HELD: and/or gains of the venture in proportion to their contribution. But in this case, it
WON Inocencio, in borrowing money andadvancing funds, was acting within was shown that Lim did not have the intent to form a corporation with Maglana
the scope of his authority as amanaging partner. et al. This can be inferred from acts of unilaterally taking out a surety from
YES 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
RATIO: incorporators in transacting the sale of the airplanes and spare parts.

The work done in the casco having been within the scope of the association ISSUE:
and necessary to carry out its express object,the borrowing of the money 1. Whether Pioneer has a cause of action against respondents.
required to carry it on, with theacquiescence if not with the affirmative consent 2. Whether failure to incorporate automatically resulted to de facto partnership.
of hisassociates, was not outside the powers of the managingpartner and
constitutes a debt for which all the associatesare liable. HELD:1. , Pioneer has no right to institute and maintain in its own name an
action for the benefit of thereinsurers. It is well-settled that an action brought
The note passed into the hands of Inocencio by reason of thesuccessive by an attorney-in-fact in his own name instead of that of the principal will not
deaths of his wife and of their only child, eachwithout debts, and for the prosper, and this is so even where the name of the principal is disclosed in
amount thereof he became acreditor, subject, however, to the deduction thecomplaint. An attorney-in-fact is not a real party in interest, that there is no
therefrom of hisproportionate part of the indebtedness. law permitting an action to bebrought by an attorney-in-fact.

The trial court treated his claim as an addition to his capitalin the firm, rather 2. NO. Partnership inter se does not necessarily exist, for ordinarily persons
than as a loan, and this constitutes one of the grounds of error stated by the cannot be made toassume the relation of partners as between themselves,
appellant. We do not deemit necessary to pass upon this objection, for the when their purpose is that no partnership shall existand it should be implied
reason that,considered as a loan, this sum would place the defendant asa only when necessary to do justice between the parties; thus, one who takes no
creditor in a stronger position as against his associatesthan if regarded as a partexcept to subscribe for stock in a proposed corporation which is never
mere contribution to capital. The error,if it be an error, is not, therefore, legally formed does not become apartner with other subscribers who engage
prejudicial to the plaintiff,but is rather beneficial to him. The respondent did not in business under the name of the pretended corporation, so asto be liable as
except to it. such in an action for settlement of the alleged partnership and contribution.

Various small sums have been paid out of the profits to someof the partners
and these were properly allowed him in thejudgment.