Lim vs.

Philippine Fishing Gear Industries Inc

FACTS: Lim Tong Lim requested Peter Yao and Antonio Chuato engage in commercial fishing with him.
The three agreed to purchase two fishing boats but since they do not have the money they borrowed
from one Jesus Lim the brother of Lim Tong Lim. Subsequently, they again borrowed money for the
purchase of fishing nets and other fishing equipments. Yao and Chua represented themselves as acting
in behalf of “Ocean Quest Fishing Corporation” (OQFC) and they contracted with Philippine Fishing Gear
Industries (PFGI) for the purchase of fishing nets amounting to more than P500k. However, they were
unable to pay PFGI and hence were sued in their own names as Ocean Quest Fishing Corporation is a
non-existent corporation. Chua admitted his liability while Lim Tong Lim refused such liability alleging
that Chua and Yao acted without his knowledge and consent in representing themselves as a
corporation.

ISSUE: Whether Lim Tong Lim is liable as a partner

HELD: Yes. It is apparent from the factual milieu that the three decided to engage in a fishing business.
Moreover, their Compromise Agreement had revealed their intention to pay the loan with the proceeds
of the sale and to divide equally among them the excess or loss. The boats and equipment used for their
business entails their common fund. The contribution to such fund need not be cash or fixed assets; it
could be an intangible like credit or industry. That the parties agreed that any loss or profit from the sale
and operation of the boats would be divided equally among them also shows that they had indeed
formed a partnership. The principle of corporation by estoppel cannot apply in the case as Lim Tong Lim
also benefited from the use of the nets in the boat, which was an asset of the partnership. Under the
law on estoppel, those acting in behalf of a corporation and those benefited by it, knowing it to be
without valid existence are held liable as general partners. Hence, the question as to whether such was
legally formed for unknown reasons is immaterial to the case.

Aurelio Litonjua Jr vs Eduardo Litonjua Sr. et al

Partnership, how formed 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 landdevelo
pment) 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 byAurelio, 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 thanP3,000.00 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 Article1773 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.

HEIRS OF JOSE LIM v. JULIET VILLA LIM, GR No. 172690, 2010-03-03

Facts:

Petitioners are the heirs of the late Jose Lim (Jose)

Jose's widow Cresencia Palad (Cresencia); and their children Elenito, Evelia, Imelda, Edelyna and Edison

They filed a Complaint[4] for Partition, Accounting and Damages against respondent Juliet Villa Lim
(respondent)... widow of the late Elfledo Lim (Elfledo), who was the eldest son of Jose and Cresencia.

Petitioners alleged that

Sometime in 1980, Jose, together with his friends Jimmy Yu (Jimmy) and Norberto Uy (Norberto),
formed a partnership to engage in the trucking business.

hey purchased a truck to be used in the hauling and transport of lumber of the sawmill.

Jose managed the operations of this trucking business until his death

Thereafter, Jose's heirs, including Elfledo, and partners agreed to... continue the business under the
management of Elfledo.

Petitioners also alleged that

Elfledo... was never a partner or an investor in the business and merely supervised the purchase of
additional trucks using the income from the... trucking business of the partners.

Elfledo died, leaving respondent as his sole surviving heir

Petitioners claimed that respondent took over the administration of the aforementioned properties,
which belonged to the estate of Jose, without their consent and approval.
Respondent traversed petitioners' allegations and claimed that Elfledo was himself a partner of
Norberto and Jimmy.

Respondent also stressed that Jose left no properties that Elfledo could have held in trust.

Respondent maintained that all the... properties involved in this case were purchased and acquired
through her and her husband's joint efforts and hard work, and without any participation or
contribution from petitioners or from Jose.

Respondent submitted that these are conjugal partnership properties; and thus, she... had the right to
refuse to render an accounting for the income or profits of their own business.

RTC rendered its decision in favor of petitioners... to submit an accounting of all incomes, profits and
rentals received by her from said properties

Aggrieved, respondent appealed to the CA.

he CA reversed and set aside the RTC's decision, dismissing petitioners' complaint for lack of merit.

petitioners argue that according to the testimony of Jimmy, the sole surviving partner, Elfledo was not a
partner; and that he and Norberto entered into a partnership with Jose.

Issues:

who between Jose and Elfledo... was the "partner" in the trucking business.

Ruling:

A partnership exists when two or more persons agree to place their money, effects, labor, and skill in
lawful commerce or business, with the understanding that there shall be a proportionate sharing of the
profits and losses among them. A contract of partnership is defined by... the Civil Code as one where
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. 1769. In determining whether a partnership exists, these rules shall apply:

(1) Except as provided by Article 1825, persons who are not partners as to each other are not partners
as to third persons;

(2) Co-ownership or co-possession does not of itself establish a partnership, whether such co-owners or
co-possessors do or do not share any profits made by the use of the property;

(3) The sharing of gross returns does not of 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;
(4) The receipt by a person of a share of the profits of a business is a prima facie evidence that he is a
partner in the business, but no such inference shall be drawn if such profits were received in payment:

(a) As a debt by installments or otherwise;

(b) As wages of an employee or rent to a landlord;

(c) As an annuity to a widow or representative of a deceased partner;

(d) As interest on a loan, though the amount of payment vary with the profits of the business;

(e) As the consideration for the sale of a goodwill of a business or other property by installments or
otherwise.

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;[15] (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;[16] (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;[17] and (5) none of the petitioners, as heirs of Jose, the alleged partner,
demanded periodic accounting from Elfledo during his lifetime.

Sunga – Chan v. Chua

Facts:

On June 22, 1992, respondent Lamberto T. Chua filed a complaint against petitioners, Lilibeth Sunga
Sunga Chan and Cecilia Sunga, daughter and wife, respectively of the deceased Jacinto L. Sunga, for
winding up of Partnership Affairs, accounting, appraisal and recovery of Shares and Damages with Writ
of Preliminary Attachment with the Regional Trial Court, Branch 11, Zamboanga del Norte.

Respondent alleged that in 1977, he verbally entered into a partnership with Jacinto in the distribution
of Shellane Liquefied Petroleum Gas (LPG) in Manila with initial capital contribution of Php100,000.00
each, with the intention that the profits would be equally divided between them. For business
convenience, respondent and Jacinto agreed to register the business name of their partnership SHELLITE
GAS APPLIANCE CENTER under the name of Jacinto as sole proprietorship.

Petitioners question the correctness of the finding of the Trial Court and the Court of Appeals that a
partnership existed in the absence of any written document to show partnership between respondent
and Jacinto from 1977 until Jacinto’s death.

Issue:

Whether or not respondent Lamberto Chua and Jacinto L. Sunga has entered into a partnership?

Held:
Yes. The court ruled that 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.
Also, Article 1772 of the Civil Code requires that partnership with a capital of Php3,000.00 or more must
register with the Securities and Exchange Commission, however this registration requirement is not
mandatory. Article 1768 of the Civil Code explicitly provides that the partnership retains its juridical
personality even if it fails register. The failure to register the contract of partnership does not invalidate
the same as among the partners, so long as the contract has the essential requisites, because the main
purpose of registration is to give notice to third parties, and it can be assumed that the members
themselves knew of the contents of their contract.