CASES:

1. LIM TONG LIM V PHILIPPINE FISHING GEAR

(page 11)

FACTS:
1. Antonio Chua and Peter Yao entered into a Contract for the purchase of
fishing nets of various sizes from the Philippine Fishing Gear Inc. on
behalf of Ocean Quest Fishing Corporation.
2. Chua and Yao alleged that they were engaged in a business venture with
Lim Tong Lim who was not a signatory to a contract.
3. The buyer failed to pay the fishing nets and floats, hence Philippine
Fishing filed a collection suit against Chua, Yao and Lim Tong Lim.
4. The suit was brought against the three in their capacities as general
partners on the allegation that Ocean Quest was not an existing
corporation.
5. Chua admitted his liability and requested a reasonable time to pay his
debt. Yao failed to appear in subsequent hearings. Lim Tong Lim filed a
Counterclaim
6. RTC RULING:
o Chua, Yao, Lim as general partners were jointly liable to pay
Philippine Fishing.
7. CA affirmed RTCs decision.
8. Hence, this petition.
Lim contends that he should not be held liable because
there is no existing partnership and he disclaims any direct
participation in the Compromise Agreement..
He is a lessor and not a partner. He merely leased the two
main asset of the purported partnership.
ISSUE: WHETHER BY THEIR ACTS, LIM, CHUA AND YAO COULD BE
DEEMED TO HAVE FORMED A PARTNERSHIP
HELD: YES.
1. From the acts of the parties it was found that Chua, Yao and Lim decided
to engage in a fishing business which they started to buying boats,
financed by a loan secured from Lims brother.
o In their compromise agreement, it was found out that it was the
parties intention to pay for loan with the proceeds of the boat. And
to divide equally among them the excess or loss.
2. The purchase and the repair of boats that were financed with borrow
money fell under the term common fund under Article 1767 because
the contribution to such fund need not to be cash or fixed assets but it
could be an intangible, like credit or security.
3. In addition, the Court finds no basis on the argument of Lim that he was
merely a lessor of the boat. The sale of the boats as well as the division
among the three of the balance remaining after the payment of their
loans, prove that the said boat (F/B Lourdes) though registered in his
name was an asset of the partnership. No lessor will sell his own property
to pay the debts of other. His consent to the sale proved that there was a
preexisting partnership.
4. DOCTRINE: A partnership may be deemed to exist among parties who
agree to borrow money to pursue a business and to divide the profits or
losses that may arise therefrom, even if it is shown that they have not
contributed any capital of their own to a common fund. Their

contribution may be in the form of credit or industry, not necessarily cash

or fixed assets.