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(1) ROJAS VS MAGLANA

GR. NO. 30616


CONTRIBUTION OF PROFIT
Facts:
Maglana and Rojas executed their Articles of Co-Partnership (Exhibit "A") called Eastcoast Development Enterprises (EDE) with
only the two of them as partners. The partnership EDE with an indefinite term of existence was duly registered on January 21,
1955 with the Securities and Exchange Commission.
One of the purposes of the duly-registered partnership was to "apply or secure timber and/or minor forests products licenses and
concessions over public and/or private forest lands and to operate, develop and promote such forests rights and concessions."
(Rollo, p. 114).
Maglana shall manage.
Rojas shall be the logging superintendent.
It is also provided in the said articles of co-partnership that all profits and losses of the partnership shall be divided share and
share alike between the partners.
Because of the difficulties encountered, Rojas and Maglana decided to avail of the services of Pahamotang as industrial partner.
They executed another Articles of Partnership, which was not registered. Except for the purpose and the term, everything else
is the same.
Second partnership was dissolved by common consent. Significantly, Maglana and Rojas agreed to purchase the interest, share
and participation in the second partnership of Pahamotang and that thereafter, the two (Maglana and Rojas) became the owners
of equipment contributed by Pahamotang.
After the withdrawal of Pahamotang, the partnership was continued by Maglana and Rojas without the benefit of any written
agreement or reconstitution of their written Articles of Partnership.
Rojas entered into a management contract with another logging enterprise, the CMS Estate, Inc. He left and abandoned the
partnership.
Rojas withdrew his equipment from the partnership for use in the newly acquired area.
Maglana wrote Rojas reminding the latter of his obligation to contribute, either in cash or in equipment, to the capital investments
of the partnership as well as his obligation to perform his duties as logging superintendent. Rojas told Maglana that he will not be
able to comply with the promised contributions and he will not work as logging superintendent. Maglana then told Rojas that the
latter's share will just be 20% of the net profits. Such was the sharing from 1957 to 1959 without complaint or dispute.
Rojas took funds from the partnership more than his contribution.
The lower court said, the partnership was a de facto partnership at will. And it said that the sharing of profits and losses is based
on actual contributions; on the basis of 80% for the defendant and 20% for the plaintiff of the profits, but from 1960 to the date of
dissolution, February 23, 1961, the plaintiff's share will be on the basis of his actual contribution and, considering his
indebtedness to the partnership, the plaintiff is not entitled to any share in the profits of the said partnership;
Issue:
The main issue in this case is the nature of the partnership and legal relationship of the Maglana-Rojas after
Pahamotang retired from the second partnership.
Ruling:
It was not the intention of the partners to dissolve the first partnership, upon the constitution of the second one. Second
partnership was dissolved by common consent. Said dissolution did not affect the first partnership which continued to exist.
Under the circumstances, the relationship of Rojas and Maglana after the withdrawal of Pahamotang can neither
be considered as a De Facto Partnership, nor a Partnership at Will, for as stressed, there is an existing
partnership, duly registered.
The conclusion is inevitable that Rojas and Maglana shall be guided in the liquidation of the partnership by the
provisions of its duly registered Articles of Co-Partnership; that is, all profits and losses of the partnership shall be
divided "share and share alike" between the partners.
It is a settled rule that when a partner who has undertaken to contribute a sum of money fails to do so, he becomes a debtor of
the partnership for whatever he may have promised to contribute (Article 1786, Civil Code) and for interests and damages from
the time he should have complied with his obligation (Article 1788, Civil Code) (Rojas contribution is less than the agreed
contribution)
Thus, as reported in the Commissioners' Report, Rojas is not entitled to any profits. In their voluminous reports which was
approved by the trial court, they showed that on 50-50% basis, Rojas will be liable in the amount of P131,166.00; on 80-20%, he
will be liable for P40,092.96 and finally on the basis of actual capital contribution, he will be liable for P52,040.31.
Consequently, except as to the legal relationship of the partners after the withdrawal of Pahamotang which is unquestionably a
continuation of the duly registered partnership and the sharing of profits and losses which should be on the basis of share and
share alike as provided for in the duly registered Articles of Co-Partnership.

(2) Benjamin Yu v. National Labor Relations Commission & Jade Mountain ProductsCo. Ltd., Willy Co, Rhodora
Bendal, Lea Bendal, Chiu Shian Jeng and Chen Ho-Fu
G.R. No. 97212 June 30, 1993
Feliciano, J.
Facts:
Yu ex-Assistant General Manager of the marble quarrying and export business operated by a registered partnership called Jade
Mountain Products Co. Ltd. The partnership was originally organized with Bendals as general partners and Chin Shian Jeng,Chen
Ho-Fu and Yu Chang as limited partners; partnership business consisted of exploiting a marble deposit in Bulacan. Yu, as Assistant
General Manager, had a monthly salary of 4000. Yu, however, actually received only half of his stipulated salary, since he had
accepted the promise of the partners that the balance would be paid when the firm shall have secured additional operating funds
from abroad. Yu actually managed the operations and finances of the business; he had overall supervision of the workers at the
marble quarry in Bulacan and took charge of the preparation of papers relating to the exportation of the firms products.
General partners Bendals sold and transferred their interests in the partnership to Co andEmmanuel Zapanta. The partnership
was constituted solely by Co and Zapanta; it continued to use the old firm name of Jade Mountain. Yu was dismissed by the new
partners
Issues:
1. WON the partnership which had hired Yu as Asst. Gen. Manager had been extinguished and replaced by a new partnership
composed of Co and Zapanta; 2. if indeed anew partnership had come into existence, WON Yu could nonetheless assert his rights
under his employment contract with the old partnership as against the new partnership
Held:
1. Yes. Changes in the membership of the partnership resulted in the dissolution of the old partnership which had hired Yu and the
emergence of a new partnership composed of Co and Zapanta.
Legal bases:
Art. 1828. The dissolution of a partnership is the change in the relation of the partners caused by any partner ceasing to be
associated in the carrying on as distinguished from the winding up of the business.
Art. 1830. Dissolution is caused:(1) without violation of the agreement between the partners;(b) by the express will of any
partner, who must act in good faith, when no definite term or particular undertaking is specified;(2) in contravention of the
agreement between the partners, where the circumstances do not permit a dissolution under any other provision of this article,
by the express will of any partner at any time;
No winding up of affairs in this case as contemplated in Art. 1829: on dissolution the partnership is not terminated, but continues
until the winding up of partnership affairs is completed
The new partnership simply took over the business enterprise owned by the oldpartnership, and continued using the old name of
Jade Mountain Products CompanyLimited, without winding up the business affairs of the old partnership, paying off its
debts,liquidating and distributing its net assets, and then re-assembling the said assets or mostof them and opening a new
business enterprise
2. Yes. the new partnership is liable for the debts of the old partnership
Legal basis: Art. 1840 (see codal)
Yu is entitled to enforce his claim for unpaid salaries, as well as other claims relating to his employment with the previous
partnership, against the new partnership
But Yu is not entitled to reinstatement. Reason: new partnership was entitled to appoint and hire a new gen. or asst. gen.
manager to run the affairs of the business enterprise take over. An asst. gen. manager belongs to the most senior ranks of
management and anew partnership is entitled to appoint a top manager of its own choice and confidence. The non-retention of
Yu did not constitute unlawful termination.
The new partnership had its own new General Manager, Co, the principal new owner himself. Yus old position thus became
superfluous or redundant.
Yu is entitled to separation pay at the rate of one months pay for each year of service that he had rendered to the old
partnership, a fraction of at least 6 months being considered as a whole year

(4) G.R. No. 144214. July 14, 2003


LUZVIMINDA J. VILLAREAL, DIOGENES VILLAREAL and CARMELITO JOSE, petitioners,
vs.
DONALDO EFREN C. RAMIREZ and Spouses CESAR G. RAMIREZ JR. and CARMELITA C. RAMIREZ, respondents.
The Facts
On July 25, 1984, Luzviminda J. Villareal, Carmelito Jose and Jesus Jose formed a partnership with a capital of P750,000 for the
operation of a restaurant and catering business under the name Aquarius Food House and Catering Services. [5] Villareal was
appointed general manager and Carmelito Jose, operations manager.
Respondent Donaldo Efren C. Ramirez joined as a partner in the business on September 5, 1984. His capital contribution
of P250,000 was paid by his parents, Respondents Cesar and Carmelita Ramirez. [6]
After Jesus Jose withdrew from the partnership in January 1987, his capital contribution of P250,000 was refunded to him in cash
by agreement of the partners.[7]
In the same month, without prior knowledge of respondents, petitioners closed down the restaurant, allegedly because of
increased rental. The restaurant furniture and equipment were deposited in the respondents house for storage. [8]
On March 1, 1987, respondent spouses wrote petitioners, saying that they were no longer interested in continuing their
partnership or in reopening the restaurant, and that they were accepting the latters offer to return their capital contribution. [9]
On October 13, 1987, Carmelita Ramirez wrote another letter informing petitioners of the deterioration of the restaurant furniture
and equipment stored in their house. She also reiterated the request for the return of their one-third share in the equity of the
partnership. The repeated oral and written requests were, however, left unheeded. [10]
Petitioners contended that respondents had expressed a desire to withdraw from the partnership and had called for its dissolution
under Articles 1830 and 1831 of the Civil Code; that respondents had been paid, upon the turnover to them of furniture and
equipment worth over P400,000; and that the latter had no right to demand a return of their equity because their share, together
with the rest of the capital of the partnership, had been spent as a result of irreversible business losses. [12]
Respondents on the other hand alleged that they did not know of any loan encumbrance on the restaurant. According to them, if
such allegation were true, then the loans incurred by petitioners should be regarded as purely personal and, as such, not
chargeable to the partnership. The former further averred that they had not received any regular report or accounting from the
latter, who had solely managed the business. Respondents also alleged that they expected the equipment and the furniture
stored in their house to be removed by petitioners as soon as the latter found a better location for the restaurant. [13]
Issues
(1) whether petitioners are liable to respondents for the latters share in the partnership;
(2) whether the CAs computation of P253,114 as respondents share is correct;
This Courts Ruling
First Issue:
Share in Partnership
Both the trial and the appellate courts found that a partnership had indeed existed, and that it was dissolved on March 1,
1987. They found that the dissolution took place when respondents informed petitioners of the intention to discontinue it
because of the formers dissatisfaction with, and loss of trust in, the latters management of the partnership affairs. These
findings were amply supported by the evidence on record. Respondents consequently demanded from petitioners the return of
their one-third equity in the partnership.
We hold that respondents have no right to demand from petitioners the return of their equity share. Except as managers of the
partnership, petitioners did not personally hold its equity or assets. The partnership has a juridical personality separate and
distinct from that of each of the partners. [23] Since the capital was contributed to the partnership, not to petitioners, it is the
partnership that must refund the equity of the retiring partners.[24]
Second Issue:
What Must Be Returned?
Since it is the partnership, as a separate and distinct entity, that must refund the shares of the partners, the amount to be
refunded is necessarily limited to its total resources. In other words, it can only pay out what it has in its coffers, which consists
of all its assets. However, before the partners can be paid their shares, the creditors of the partnership must first be
compensated.[25] After all the creditors have been paid, whatever is left of the partnership assets becomes available for the
payment of the partners shares.
Evidently, in the present case, the exact amount of refund equivalent to respondents one-third share in the partnership cannot
be determined until all the partnership assets will have been liquidated in other words, sold and converted to cash and all
partnership creditors, if any, paid. The CAs computation of the amount to be refunded to respondents as their share was thus
erroneous.
First, it seems that the appellate court was under the misapprehension that the total capital contribution was equivalent to the
gross assets to be distributed to the partners at the time of the dissolution of the partnership. We cannot sustain the underlying
idea that the capital contribution at the beginning of the partnership remains intact, unimpaired and available for distribution or
return to the partners. Such idea is speculative, conjectural and totally without factual or legal support.
Generally, in the pursuit of a partnership business, its capital is either increased by profits earned or decreased by losses
sustained. It does not remain static and unaffected by the changing fortunes of the business. In the present case, the financial
statements presented before the trial court showed that the business had made meager profits. [26] However, notable therefrom is
the omission of any provision for the depreciation [27] of the furniture and the equipment. The amortization of the
goodwill[28] (initially valued at P500,000) is not reflected either. Properly taking these non-cash items into account will show that
the partnership was actually sustaining substantial losses, which consequently decreased the capital of the partnership. Both the
trial and the appellate courts in fact recognized the decrease of the partnership assets to almost nil, but the latter failed to
recognize the consequent corresponding decrease of the capital.
Third, the CA failed to reduce the capitalization by P250,000, which was the amount paid by the partnership to Jesus Jose when
he withdrew from the partnership.
Because of the above-mentioned transactions, the partnership capital was actually reduced. When petitioners and respondents
ventured into business together, they should have prepared for the fact that their investment would either grow or shrink. In the
present case, the investment of respondents substantially dwindled. The original amount of P250,000 which they had invested
could no longer be returned to them, because one third of the partnership properties at the time of dissolution did not amount to
that much.
Petitioners further argue that respondents acted negligently by permitting the partnership assets in their custody to deteriorate
to the point of being almost worthless. Supposedly, the latter should have liquidated these sole tangible assets of the
partnership and considered the proceeds as payment of their net capital. Hence, petitioners argue that the turnover of the

remaining partnership assets to respondents was precisely the manner of liquidating the partnership and fully settling the latters
share in the partnership.

(5) Lintonjua Jr vs Lintonjua Sr et al


G.R. NOS. 166299-300
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
Eduardos 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
Aurelios 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.
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 between them.[20] A
contract of partnership is defined by the Civil Code as one where two or more persons bound themselves to contribute money,
property, or industry to a common fund with the intention of dividing the profits among themselves. [21] A joint venture, on the
other hand, is hardly distinguishable from, and may be likened to, a partnership since their elements are similar, i.e., community
of interests in the business and sharing of profits and losses. Being a form of partnership, a joint venture is generally governed by
the law on partnership.
The underlying issue that necessarily comes to mind in this proceedings is whether or not petitioner and respondent
Eduardo are partners in the theatre, shipping and realty business, as one claims but which the other denies. And the issue
bearing on the first assigned error relates to the question of what legal provision is applicable under the premises, petitioner
seeking, as it were, to enforce the actionable document - Annex A-1 - which he depicts in his complaint to be the contract of
partnership/joint venture between himself and Eduardo. Clearly, then, a look at the legal provisions determinative of the
existence, or defining the formal requisites, of a partnership is indicated. Foremost of these are the following provisions of the
Civil Code:
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. 1772. Every contract of partnership having a capital of three thousand pesos or more, in money or property, shall appear in a
public instrument, which must be recorded in the Office of the Securities and Exchange Commission.
Failure to comply with the requirement of the preceding paragraph shall not affect the liability of the partnership and the
members thereof to third persons.
Art. 1773. A contract of partnership is void, whenever immovable property is contributed thereto, if an inventory of said property
is not made, signed by the parties, and attached to the public instrument.

(6) TANG-ENG KEE vs CA


G.R. No. 126881
FACTS
Petitioners claimed that after the second World War, Tan Eng Kee and Tan Eng Lay, pooling their resources and industry together,
entered into a partnership engaged in the business of selling lumber and hardware and construction supplies.
They named their enterprise Benguet Lumber which they jointly managed until Tan Eng Kees death.
However, they claimed that in 1981, Tan Eng Lay and his children caused the conversion of the partnership Benguet Lumber into
a corporation called Benguet Lumber Company. The incorporation was purportedly a ruse to deprive Tan Eng Kee and his heirs of
their rightful participation in the profits of the business. The heirs want to have an accounting and an equal division of the net
assets of Benguet Lumber.
Issue:
Whether Tan Eng Kee and Tan Eng Lay were partners in Benguet Lumber.
Ruling:
1. He was only an employee not a partner.
Partnership presupposes the following elements [citation omitted]: 1) a contract, either oral or written. However, if it involves real
property or where the capital is P3,000.00 or more, the execution of a contract is necessary; 2) the capacity of the parties to
execute the contract; 3) money property or industry contribution; 4) community of funds and interest, mentioning equality of the
partners or one having a proportionate share in the benefits; and 5) intention to divide the profits, being the true test of the
partnership. The intention to join in the business venture for the purpose of obtaining profits thereafter to be divided, must be
established.
Undoubtedly, the best evidence would have been the contract of partnership itself, or the articles of partnership but there is
none.
Besides, it is indeed odd, if not unnatural, that despite the forty years the partnership was allegedly in existence, Tan Eng Kee
never asked for an accounting. The essence of a partnership is that the partners share in the profits and losses. Each has the
right to demand an accounting as long as the partnership exists.
They did not present and offer evidence that would show that Tan Eng Kee received amounts of money allegedly representing his
share in the profits of the enterprise.
2. There was no partnership. The trial court erred in claiming there was in the form of joint-venture. The two are
different from each other because:
(a) A joint adventure (an American concept similar to our joint accounts) is a sort of informal partnership, with no firm name and
no legal personality. In a joint account, the participating merchants can transact business under their own name, and can be
individually liable therefor.
(b) Usually, but not necessarily a joint adventure is limited to a SINGLE TRANSACTION, although the business of pursuing to a
successful termination may continue for a number of years; a partnership generally relates to a continuing business of various
transactions of a certain kind.
But
It would seem therefore that under Philippine law, a joint adventure is a form of partnership and should thus be governed by the
law of partnerships. The Supreme Court has however recognized a distinction between these two business forms, and has held
that although a corporation cannot enter into a partnership contract, it may however engage in a joint adventure with others.

(7) Lim vs. Philippine Fishing Gear Industries Inc. [GR 136448, 3 November 1999]

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.

(9) GR. No. 109248 July 3, 1995


GREGORIO F. ORTEGA, TOMAS O. DEL CASTILLO, JR., and BENJAMIN T. BACORRO, petitioners, vs. HON. COURT OF
APPEALS, SECURITIES AND EXCHANGE COMMISSION and JOAQUIN L. MISA, respondents.
FACTS:
Ortega, then a senior partner in the law firm Bito, Misa, and Lozada withdrew from the said firm. He filed with SEC a petition for
dissolution and liquidation of the partnership. The SEC en banc ruled that withdrawal of Misa from the firm had dissolved the
partnership. Since it is partnership at will, the law firm could be dissolved by any partner at anytime, such as by withdrawal
therefrom, regardless of good faith or bad faith, since no partner can be forced to continue in the partnership against his will.
ISSUE:
1. WON the partnership of Bito, Misa & Lozada (now Bito, Lozada, Ortega & Castillo)is a partnership at will
2. WON the withdrawal of Misa dissolved the partnership regardlessof his good or bad faith
HELD:
: 1. Yes. The partnership agreement of the firm provides that [t]he partnership shall continue so long as mutually satisfactory
and upon the death or legal incapacity of one of the partners, shall be continued by the surviving partners.
2. Yes. Any one of the partners may, at his sole pleasure, dictate a dissolution of the partnership at will (e.g. by way of
withdrawal of a partner). He must, however, act in good faith, not that the attendance of bad faith can prevent the dissolution of
the partnership but that it can result in a liability for damages

(10)
MICHAEL C. GUY VS. ATTY. GLENN C. GACOTT
G.R. No. 206147, January 13, 2016
FACTS:
Gacott (Gacott) from Palawan purchased two (2) brand new transreceivers from Quantech Systems Corporation (QSC) in
Manila through its employee due to major defects, Gacott personally returned the transreceivers to QSC and requested that they
be replaced. Medestomas received the returned transreceivers and promised to send him the replacement units within two (2)
weeks from May 10, 1997.Time passed and Gacott did not receive the replacement units as promised. QSC informed him that
there were no available units and that it could not refund the purchased price. Despite several demands, both oral and written,
Gacott was never given a replacement or a refund. The demands caused Gacott to incur expenses in the total amount of
P40,936.44. Thus, Gacott filed a complaint for damages. Summons was served upon QSC and Medestomas, afterwhich they filed
their Answer, verified by Medestomas himself and a certain Elton Ong (Ong). QSC and Medestomas did not present any evidence
during the trial. During the execution stage, Gacott learned that QSC was not a corporation, but was in fact a general partnership
registered with the Securities and Exchange Commission (SEC). In the articles of partnership,9 Guy was appointed as General
Manager of QSC. To execute the judgment, Branch Sheriff Ronnie L. Felizarte (Sheriff Felizarte) went to the main office of the
Department of Transportation and Communications, Land Transportation Office (DOTC-LTO), Quezon City, and verified whether
Medestomas, QSC and Guy had personal properties registered therein. Upon learning that Guy had vehicles registered in his
name, Gacott instructed the sheriff to proceed with the attachment of one of the motor vehicles of Guy based on the certification
issued by the DOTC-LTO.
ISSUE: Whether or not the action of Gacott is proper?
HELD:
No, the court ruled that the partners' obligation with respect to the partnership liabilities is subsidiary in nature. It provides that
the partners shall only be liable with their property after all the partnership assets have been exhausted. To say that one's liability
is subsidiary means that it merely becomes secondary and only arises if the one primarily liable fails to sufficiently satisfy the
obligation. Resort to the properties of a partner may be made only after efforts in exhausting partnership assets have failed or
that such partnership assets are insufficient to cover the entire obligation. The subsidiary nature of the partners' liability with the
partnership is one of the valid defenses against a premature execution of judgment directed to a partner.In this case, had he
been properly impleaded, Guy's liability would only arise after the properties of QSC would have been exhausted. The records,
however, miserably failed to show that the partnership's properties were exhausted. The report of the sheriff showed that the
latter went to the main office of the DOTC-LTO in Quezon City and verified whether Medestomas, QSC and Guy had personal
properties registered therein. Gaeott then instructed the sheriff to proceed with the attachment of one of the motor vehicles of
Guy. The sheriff then served the Notice of Attachment/Levy upon Personalty to the record custodian of the DOTC-LTO of
Mandaluyong City. A similar notice was served to Guy through his housemaid at his residence. Clearly, no genuine efforts were
made to locate the properties of QSC that could have been attached to satisfy the judgment - contrary to the clear mandate of
Article 1816. Being subsidiarily liable, Guy could only be held personally liable if properly impleaded and after all partnership
assets had been exhausted.
(11)
SUNGA-CHAN vs CHUA
G.R. No. 143340
Facts:
Respondent alleged that in 1977, he verbally entered into a partnership with Jacinto in the distribution of Shellane Liquefied
Petroleum Gas (LPG) in Manila.
They had an initial capital of P200,000.00
Upon Jacintos death in the later part of 1989, his surviving wife, petitioner Cecilia and particularly his daughter, petitioner
Lilibeth, took over the operations, control, custody, disposition and management of Shellite without respondents consent.
Despite respondents repeated demands upon petitioners for accounting, inventory, appraisal, winding up and restitution of his
net shares in the partnership, petitioners failed to comply. Petitioner Lilibeth allegedly continued the operations of Shellite,
converting to her own use and advantage its properties.
Issue:
Whether or not there existed a partnership considering that there was no written document to show such
partnership.
Ruling:
Yes.
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.
The essential points that must be proven to show that a partnership was agreed upon are (1) mutual contribution to a common
stock, and (2) a joint interest in the profits.

True, Article 1772 of the Civil Code requires that partnerships with a capital of P3,000.00 or more must register
with the SEC, 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 to 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.
Considering that the death of a partner results in the dissolution of the partnership, in this case, it was after Jacintos death that
respondent as the surviving partner had the right to an account of his interest as against petitioners. It bears stressing that while
Jacintos 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.

(12)
TOCAO V. CA
G.R. No. 127405; October 4, 2000
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 letter addressed 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 courts 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.

(14)G.R. No. L-23232


June 17, 1970 VICENTE DIRA vs PABLO D. TAEGA
Facts:
In March 1946, plaintiff and defendant together with Francisco Pagulayan entered into a partnership for the purpose of
engaging in the printing business in the City of Tacloban and that the terms of the said partnership was for a period of five (5)
years from the organization thereof.
The plaintiff was designated as President and his salary as such was P150.00 a month, that, during his incumbency as
President until the expiration of the period, the defendant who was the manager-treasurer of the partnership never paid him his
salary; that at the time the plaintiff was also the editor of the Leyte-Samar Tribune and in accordance with their Articles of
Partnership established the said periodicals, the plaintiff as editor was to receive a salary of P100.00 a month; that this salary and
the accrued amount therein was not also paid by the defendant, who was the business manager of the enterprise; that the capital
of the said partnership was P5,000.00 equally divided among the partners;
Defendant had been in the exclusive possession of all the printing equipment since 1946. Plaintiff himself admitted that
the defendant conducted himself as absolute owner of the printing equipment. He testified that defendant changed location of
the printing press which place he (Dira) did not know. According to defendant himself, he believed in good faith and acted
accordingly since 1947 that he was the sole owner of the printing press, after the refusal of the plaintiff to pay his indebtedness
of P1,100.00 to him. From the above facts, it can be deduced that defendant had acquired ownership of the printing equipment
and accessories in question as Article 1132 of the Civil Code provides that the ownership of movables prescribes through
uninterrupted possession of eight years, without need of any condition. Surely 1946 or 1947 to 1961, more than four and/or eight
years had elapsed.
Plaintiff stated that defendant ignored him and did not give him any participation, since 1947, in the business, yet he did
not demand an immediate accounting of the business.
In his complaint, plaintiff prayed for payment of his salaries as president and editor of leyte-Samar tribune and his
alleged share in the partnership
Issue:
1.Whether or not plaintiff is entitled to claim partnership shares and his salaries as president of the firm and as editor of
leyte-Samar tribune.
2. Whether or not defendant acted as trustee when he took over the partnership affairs.
Held:
First issue:
No. The court upheld the defendants contention that such claims were barred by prescription. Defendant had an
exclusive control of the partnership affairs since 1947 which the name of the firm to Tanega printing press. Plaintiff never made
any intervention nor participation of the business.
Under Article 1153 of the Civil Code, a demand for "accounting runs from the day the persons who should render the
same ceases in their functions," which in this case as in 1947, when the appellee began to operate the businesses as exclusively
his own. Again, inasmuch as the longest period in the chapter on prescription of the Civil Code is ten years, it is evident that
appellant's action for accounting is already barred. The same is true with the claim for rentals and recovery of proportional
ownership of the printing equipment and accessories, as to which, appellants period to bring his actions accrued also in 1947,
fourteen years before this suit was filed.
Second Issue
Equally untenable is appellant's reliance on the theory that as a member of the partnership, appellee continued as a
trustee even after 1947, when said appellee took the business for himself and even after 1951, the expiry date of the
agreements. The provisions of Article 1785 to the effect that: .
When a partnership for a fixed term or particular undertaking is continued after the termination of such term or
particular undertaking without any express agreement, the rights and duties of the partners remain the same as they were at
such termination, so far as is consistent with a partnership at will.
A continuation of the business by the partners or such of them as habitually acted therein during the term, without any
settlement or liquidation of the partnership affairs, is prima facie evidence of a continuation of the partnership.
and Article 1829 thus:
On dissolution the partnership is not terminated, but continues until the winding up of partnership affairs is completed.
Are clearly inapplicable here, for the simple reason that those articles are premised on a continuation of the partnership
as such, which is not our case, because here appellee repudiated the partnership as early as 1947 with either actual or presumed
knowledge of the appellant. By analogy, at least, with the rule as to a co-ownership, which a partnership essentially is,
prescription does not run in favor of any of the co-owners only as long as the co-owner claiming against the others "expressly or
impliedly recognizes the co-ownership," a circumstance irreconcilably inconsistent with appellee's conduct of transferring the
place of business, changing its name and not paying appellant any of the salaries agreed upon in the articles of partnership.

(15)
PRIMELINK PROPERTIES AND DEVELOPMENT CORPORATION VS LAZATIN MAGAT
G.R. No. 167379 June 27, 2006
FACTS:
In 1994, Primelink Properties and the Lazatin siblings entered into a joint venture agreement whereby the Lazatins shall
contribute a huge parcel of land and Primelink shall develop the same into a subdivision. For 4 years however, Primelink failed to
develop the said land. So in 1998, the Lazatins filed a complaint to rescind the joint venture agreement with prayer for
preliminary injunction. In said case, Primelink was declared in default or failing to file an answer and for asking multiple motions
for extension. The trial court eventually ruled in favor of the Lazatins and it ordered Primelink to return the possession of said
land to the Lazatins as well as some improvements which Primelink had so far over the property without the Lazatins paying for
said improvements. This decision was affirmed by the Court of Appeals. Primelink is now assailing the order; that turning over
improvements to the Lazatins without reimbursement is unjust; that the Lazatins did not ask the properties to be placed under
their possession but they merely asked for rescission.
ISSUE: Whether or not the improvements made by Primelink should also be turned over under the possession of the Lazatin.
HELD: Yes. In the first place, even though the Lazatins did specifically pray for possession the same (placing of improvements
under their possession) is incidental in the relief they prayed for. They are therefore entitled possession over the parcel of land
plus the improvements made thereon made by Primelink.
In this jurisdiction, joint ventures are governed by the laws of partnership. Under the laws of partnership, when a partnership is
dissolved, as in this case when the trial court rescinded the joint venture agreement, the innocent party has the right to wind up
the partnership affairs.
With the rescission of the JVA on account of petitioners fraudulent acts, all authority of any partner to act for the partnership is
terminated except so far as may be necessary to wind up the partnership affairs or to complete transactions begun but not yet
finished. On dissolution, the partnership is not terminated but continues until the winding up of partnership affairs is
completed. Winding up means the administration of the assets of the partnership for the purpose of terminating the business
and discharging the obligations of the partnership.
It must be stressed, too, that although the Lazatins acquired possession of the lands and the improvements thereon, the said
lands and improvements remained partnership property, subject to the rights and obligations of the parties, inter se, of the
creditors and of third parties and subject to the outcome of the settlement of the accounts between the parties, absent any
agreement of the parties in their JVA to the contrary (here no agreement in the JVA as to winding up). Until the partnership
accounts are determined, it cannot be ascertained how much any of the parties is entitled to, if at all.
The transfer of the possession of the parcels of land and the improvements thereon to respondents was only for a specific
purpose: the winding up of partnership affairs, and the partition and distribution of the net partnership assets as provided by
law.57 After all, Article 1836 of the New Civil Code provides that unless otherwise agreed by the parties in their JVA, respondents
have the right to wind up the partnership affairs:
Art. 1836. Unless otherwise agreed, the partners who have not wrongfully dissolved the partnership or the legal representative of
the last surviving partner, not insolvent, has the right to wind up the partnership affairs, provided, however, that any partner, his
legal representative or his assignee, upon cause shown, may obtain winding up by the court.
It must be stressed, too, that although respondents acquired possession of the lands and the improvements
thereon, the said lands and improvements remained partnership property, subject to the rights and obligations of
the parties, inter se, of the creditors and of third parties under Articles 1837 and 1838 of the New Civil Code, and
subject to the outcome of the settlement of the accounts between the parties as provided in Article 1839 of the
New Civil Code, absent any agreement of the parties in their JVA to the contrary.58 Until the partnership accounts
are determined, it cannot be ascertained how much any of the parties is entitled to, if at all.
It was thus premature for petitioner Primelink to be demanding that it be indemnified for the value of the improvements on the
parcels of land owned by the joint venture/partnership. Notably, the JVA of the parties does not contain any provision designating
any party to wind up the affairs of the partnership.