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John Carlo Dizon

Case Digests on P.A.T.

Aurbach v. Sanitary Wares Manufacturing Corporation

In 1961, Saniwares, a domestic corporation was made. The corporation through an
incorporator named Baldwin Young ventured into foreign countries and sought to expand
the business with American or European investors. Successfully, the corporation entered
into an agreement with American Standard Inc. The ASI group owned 40% of the
corporation stocks. The partnership prospered, but however during an annual
stockholders meeting on March 8, 1983, there was a disagreement because of the voting
of the Board of Directors. The major group can nominate with 6 persons while the ASI
group can nominate 3 persons as part of the agreement into the protection of the ASI
group as a minor group. Petitioners filed motions that provide arguments that indicate the
agreement between Sanitary Wares Manufacturing Corporation and ASI, as a

Whether or not the nature of the business established by the parties is a joint venture or
a corporation.

The court has held that the true intent of the parties when entering a contract should be
answered by facts. A joint venture is used by the want of expanding the business. It takes
place upon an agreement between two parties as a measure to expand. It is quite similar
to a partnership in a sense that there is a common interest, modes of profits and losses
and the mutual right to control. In the case at hand, there was no agreement between
Sanitary Wares Corporation and American Standard Inc. whether the true intent between
the parties is a corporation. The true intent of the parties in their agreement is to establish
a Joint Venture. Since only natural persons under the scope of our laws are allowed to
form partnerships, it would be a resort for corporations to consider a joint venture as an
alternative for one to expound their interest in business. Thus, the court considers it as a
joint venture.

Lim Tong Lim v. Philippine Fishing Gear Industries Inc.

Antonio Chua and Peter Yao, on behalf of Ocean Quest Fishing Corporation entered into
a contract purchasing fishing nets of various sizes from the Philippine Fishing Gear
Industries. Both claimed that they were engaged in a business venture with Lim Tong Lim
who was not a signatory to the agreement. The total price amounted to P532,045 plus
four hundred pieces of floats worth P68,000 were also bought. The buyers having failed
to pay for the nets and the floats, resulted into the private respondent filing a collection
suit against Yao, Chua and Lim. Being the Ocean Quest Fishing Corporation was not
existent, they were charged as general partners. Chua filed a manifestation admitting his
liability and requested reasonable time to pay, as well as he returned several nets in his
possession. Yao filed an Answer which deemed to have waived his right to cross examine
witnesses due to his failure to appear in the hearings. Lim on the other hand filed an
answer with counterclaim and cross claim. Trial court rendered its decision in favor of the
respondent, thus identifying Chua, Yao and Lim, as general partners and were ordered
as jointly liable to pay. The court based its decision on an agreement whereas the joint
liability was presumed from the equal distribution of the profits and losses. Then, the Court
of Appeals affirmed. The Petitioner then filed a petition to reverse the decision.

Whether or not there exists a partnership among Lim, Chua and Yao.

Yes, a partnership exists among the three. Pursuant to Art. 1767 of the Civil Code, it
states that by the contract of partnership were two or more persons bind themselves to
contribute money, property or industry to a common fund with the intent of dividing the
profits among themselves proves the existence of a partnership. The petitioner requested
Yao to engage commercial fishing, whereas Yao was already Chuas partner. That they
acquired and agreed to buy two fishing vessels, and borrowed money to finance the
venture. In the compromise agreement, it was revealed that they intended to pay the loan
with the proceeds of the sale of the boats and to divide among themselves losses and

Aurelio Litonjua Jr vs Eduardo Litonjua Sr. et al

Aurelio Litonjua Jr. and Eduardo Litonjua Sr. are brothers. The legal dispute between
them started when on December 4, 2002, Aurelio filed a suit against his brother, and
several corporations for specific performance and accounting. Petitioner alleges that
since June 1973, he and his brother are into a joint venture/partnership arrangement in
the Odeon Theater business. Sometime in 1992, the brothers relationship became sour
that the petitioner requested for an accounting and liquidation of his share of the
partnership but was not heeded. The trial court affirmed the petitioners claim, which
resulted into the defendant raising appeals.
Whether or not there exists a partnership.

No, there exists no partnership. A partnership exists when two or more persons agree to
place their money, effects, labor and shill in a lawful commerce with understanding that
there shall be proportionate sharing of profits and losses between them. The petitioners
claim that he is a partner was only his supposed share of his family business, that the
document the petitioner presented lacked legal binding, since it was unsigned by the
respondent. Since the respondent, through that document clearly indicated that the
petitioners claim is only his share, it lacks the essential requisite to the existence of a
partnership where two contracting minds must mutually agree to contribute money,
property or industry to a common fund.

Emnace v. CA
Emilio Emnace, Vicente Tabanao & Jacinto Divinagracia formed a partnership engaged
in the business of fishing. After which Divinagracia decided to leave the partnership. As
a result, the partners agreed to dissolve the partnership. At that time, the partnership has
an estimated asset amounting to an estimate of P 90,000,000.00.
However when Vicente Tabanao died in 1994, the petitioner failed to give a statement of
assets and liabilities to his heirs. Even after formal demands for payments, the petitioner
failed to compromise, thus the heirs of Tabanao filed a civil action. The petitioner argued
on grounds of prescription, lack of personal capacity of the heirs to sue, failure to appoint
the heirs as administratix of the estates, and failure to pay the required docket fees.

Whether or not the case has overdue its prescription period.

No. In the case at hand, prescription has yet to begin. The stages of ending a partnership
are: a) dissolution, b) winding up, and c) termination. In this case, the partnership has
been decided to be dissolved but as such, it did not perfect the dissolution because no
accounting for the total assets and liabilities took place for a proper liquidation. The
partnership, although dissolved, continues to exist and its legal personality is retained
until all obligations have been fulfilled. Prescription shall only start when the dissolution
of the partnership and the final accounting is finished.
Testate Estate of Mota v. Serra
Salvador Serra, owner of Plama Central entered into a contract of partnership with Mota
et al, as owners of San Isidro Central for the construction of a railroad line. The expenses
will be divided 50-50 among the parties although Mota will be initially liable for the
expenses. Therafter, Serra sold Plama Central to Whitaker and Concepcion. The latter
bought from Mota et al half of the railroad line and that the partnership contract should be
dissolved upon the execution of the said contract. Serra was then unable to pay his share
of the expenses, resulted into Mota filing an action for collection. Serra contends that
having the partnership terminated also terminated his obligation to the contract.
Whether or not Serra cannot be compelled to be liable to pay Mota a part of the costs as
stipulated in the contract of partnership by reason of the dissolution of the partnership.
No, Serra is liable. There was no novation of the contract and there was none intended.
The petitioner have not expressly consented to the substitution of Serra. It should be
noted that to give novation a legal effect, both parties must consent to it. The fact that
Whitaker and Concepcion were willing to assume Serras obligation to Mota is of no avail,
if the latter did not expressly consent to it. The dissolution of a partnership does not relieve
any of the liabilities of existing obligations, however it does save them from new
obligations to which they have not expressly or impliedly assented. The partnership
continues even after dissolution for the purpose of winding up its affairs, and it cannot be
considered extinguished until all the obligations pertaining to it are fulfilled.

Victorias Milling Co., Inc. v CA

Saint Therese Merchendise regularly bought sugar to Victorias Milling Co. That upon
these transactions, a specific transaction proof identified as SLDR No. 1214M existed.
Thereafter, the SLDR was sold to Consolidated Sugar Corporation for almost P15 million.
CSC then used the SLDR, and was able to withdraw 2000 bags of sugar. However, after
which, the CSC was denied withdrawal of the bags of sugar. CSC then demanded for the
sugar but VMC denied again, claiming that STM withdrew the sugar. CSC then filed for a
civil action for a specific performance, as such, the delivery of the sugar. Cases were filed
by both VMC and CSC.

Whether or not the court erred in not ruling that the CSC was an agent of STM as such,
estopped from suing as an assignee.
Whether or not the court erred in not ruling that the sale of sugar under the SLDR was a
conditional sale.

No, VMC relied upon the STMs letter of authority to allow the respondent CSC to
withdraw 2000 bags of sugar, which is one of the requisites of being an agent as per
article 1868 which states that a person who binds himself to render some service to do
something in representation or on behalf of another with the consent of the latter is
considered as an agent. However, there is no proof of the allegations of the petitioner.
There was no presented proof that CSC is an agent of STM. Control being one of the
factors of the existence of an agency, in which, is not visible between CSC and STM
proves that the former is not an agent of the latter, whereas the former is merely a buyer
of the SLDR and not an agent.
No, when identifying the instrument, in instances of confusion, the true intent of the parties
is the primary consideration. Since through the SLDR. No. 1214M, STM and CSCs intent
was to the sale of the instrument. Another evidence is a clause in the SLDR which states
the transfer of the title of the sugar. The contract is between the parties and must be

Amon Trading Corp & Juliana Marketing v. CA

Tri-Realty is in need of cement bags for its projects. One named Eleanor Sanchez
introduced herself as a representative from Lines and Spaces. She offered to deliver to
the respondent cement bags. The respondent then ordered cement bags, thus, the agent
bought the cement from Amon Trading Corp. and its sister company Juliana Marketing.
Tri-Realty ordered 12,050 cement bags from Lines and Spaces. The respondent paid an
advance of P 592,900 for the cement bags. From the 12,050 bags, 6850 bags were
delivered but however 5,200 bags were left undelivered. Amon Trading Corp said that it
could not deliver the bags as they were reimbursed as ordered by Eleanor Sanchez. Then
the respondent sent out demand for the remaining bags. Cases thereafter ensued
between the parties.


Whether or not there was a contract of agency between Lines and Spaces Interior
Center and the respondent.
No. Although there was a misrepresentation, being that Eleanor Sanchez acted as the
representative of the Lines and Spaces, there exists no contract of agency between the
private respondent and the latter. Lines and Spaces was, but a mere supplier for the
respondents cement needs. As indicated in Art. 1868, a contract of agency means that
a person should bind himself as to render service to do something in representation or on
behalf of another with the consent and authority of the latter.

Cuizon v. CA
Kue Cuison, petitioner, is a businessman engaged in the buying and selling of different
kinds of papers. Respondent Valiant Investment Associates delivered paper products to
a certain Lilian Tan of LT Trading. The deliveries made by respondent is pursuant to
orders of placed by Tiu Huy Tiac who was then an employee of the petitioner. As payment,
Tiac issued 9 checks to the respondent as payment for the products. Unfortunately the
checks were later dishonored, which led to the respondent making several demands to
the petitioner in order to pay for the merchandise in question. The petitioner denied
involvement with the said transaction and refused to pay the respondent. The respondent
then filed an action against petitioner for the collection of sum of money. At the hearing
the trial court dismissed the complaint against petitioner for lacking merit. On appeal,
however, the decision of the trial court was modified, then reversed by the CA.
Whether or not the court erred in determining Tiac as an agent of the defendant.

No, Tiac, was considered by many accounts of witnesses as a manager of the petitioners
store. It is a well-established rule that one who clothes another with apparent authority
as his agent and holds him out to the public as such cannot be permitted to deny the
authority of such person to act as his agent, to the prejudice of innocent third parties
dealing with such person in good faith and in the honest belief that he is what he appears
to be.
The evidence purports to him being responsible for the business when the petitioner is
not at the store. Tiac becomes an agent of the petitioner by estoppel. Petitioner is
therefore liable for the transaction entered upon by his agent, as stated by Art. 1911 of
the Civil Code of the Philippines:
Even when the agent has exceeded his authority, the principal is solidarily liable with
the agent if the former allowed the latter to act as though he had full powers.
Dominion Insurance Corporation v. CA
On January 25, 1991, plaintiff Rodolfo Guevarra instituted a civil action for the sum of
money against defendant Dominion Insurance Corporation. He sought to recover the sum
of P156,473.90 which he claims to have advanced in his capacity as a manager of the
defendant to satisfy certain claims filed by the defendants clients. The defendant denied
liability to the plaintiff and asserted a counterclaim of P249,672.53 as a representation of
premiums that the plaintiff allegedly failed to remit.
Whether or not Guevarra acted within his authority as agent for the defendant
Yes, as previously stated, by the contract of agency, a person binds himself to render
some service to do something in representation or on behalf of another with the consent
or authority of the latter. On the part of the principal, there must be actual intention to
appoint and on the part of the agent, to intentionally accept the appointment and act on
it. A perusal of the Special Power of Attorney would show that Guevarra is indeed an
agent. The respondent was authorized to pay the claim of the insured, but the payment
would come from the revolving fund or collection in his possession.

Siredy Enterprise v. CA
Conrado De Guzman is an architect-contractor doing business under the name and style
of Jigson Construction. Siredy Enterprises Inc. is the owner and developer of a village in
Sta. Cruz, Marilao, Bulacan. The president of the corporation named Ismael Yanga Sr.
duly authorized execute the letter of authority to Hermogenes Santos to negotiate and
enter into contracts, to sell lots, and to represent and make agreements for payments.
Thereafter, Santos entered into an agreement with De Guzman to construct residential
units at Siredy Enterprises projects. De Guzman then tried to collect the unpaid account
from petitioner, but failed, which resulted into him filing specific performance from the
latter. The trial court agreed with the petitioner based on the doctrine of privity of contract.

Whether or not Hermogenes Santos is an agent of Siredy Enterprise.
Yes, by relationship of agency one party called the principal who authorizes another,
called an agent, to act for and in his behalf transactions with third persons, and is
emphasized by the execution of the letter of authority given by the president of Siredy to
Mr. Santos. The authority conferred upon the latter includes the power to enter into a
construction contract to build houses such as the Deed of Agreement between Santos
and De Guzmans Jigscon Construction, thus is a conclusion that Siredy is bound by the
contract through the representation of its agent, Santos.