Partnership

Partnership as Primarily a Contractual Relationship It must be noted however that this partnership was subject to a suspensive condition which is
the execution of a written agreement regarding the distribution of profits, character of
FERNANDEZ VS. DELA ROSA partnership, etc. But since the defendant actually purchased the cascoes, it would seem that
the partnership already existed. And as furthermore provided by the Civil Code, a written
Facts: On the part of plaintiff Fernandez, he claims that he entered into a verbal agreement agreement was not necessary in order to give efficacy to the verbal agreement of the
with defendant De la Rosa to form a partnership for the purchase of cascoes with the partnership because the contributions of the partners to the partnership were not in the form
undertaking that the defendant will buy the cascoes and that each partner will furnish such of immovables.
amount as he could, while the profits will be divided proportionately. Plaintiff furnished P300
for casco No. 1515 and P825 for casco No. 2089, both of which were placed under the name of b) W/N the partnership was terminated when the defendant returned the P1,125 to plaintiff.
the defendant only. In April 1900, the parties undertook to draw up articles of their partnership No.
for the purpose of embodying it in an authentic document. The agreement however did not
materialize because defendant proposed articles which were materially different from their Held:
verbal agreement, and he was also unwilling to include casco No. 2089 in the partnership.
b) During trial, the court was able to prove that plaintiff actually furnished some amount for
Because the cascoes were under the management of the defendant, the plaintiff demanded an
the repair of the cascoes and that it was presumed that a profit has been obtained by the
accounting over it to which the defendant refused claiming that no partnership existed
defendant prior to the return of the money. With these, the return of the
between them.
P1,125 fell short of the amount which the plaintiff has actually contributed to the partnership.
De la Rosa, on the other hand, admits that he desired to form a partnership with the plaintiff
For these reasons, the acceptance by the plaintiff of the amount returned by the defendant did
but denies that any agreement was ever consummated. Moreover, he denied receiving any
not have the effect of terminating the legal existence of the partnership by converting it into a
money furnished by plaintiff for casco No. 1515, but claims that he merely borrowed the P300
societas leonina.
on his individual account from the bakery business in which plaintiff was a copartner. And as
for the P825 furnished by the plaintiff, the defendant claims that it was actually for casco No.
The court also proved that there was no intention on the part of the plaintiff, in accepting the
1515 and not for casco No. 2089. He also added that the repairs made on the two cascoes
money, to relinquish his rights as a partner. On the contrary he notified defendant that he
were exclusively borne by him, and that he returned a sum of P1,125 to plaintiff with an
waived none of his rights in the partnership. Also the lack of recognition on the part of the
express reservation on his part of all his rights as a partner.
defendant of the plaintiff’s right in the partnership property and in the profits does not give
the former the right to force a dissolution upon the later upon the terms which the plaintiff is
Issue: a) W/N a partnership existed between the parties. Yes.
unwilling to accept. A partnership therefore existed between the two and cascoes No. 1515
a) The essential points upon which the minds of the parties must meet in a contract of and 2089 are partnership properties.
partnership are 1) mutual contribution and 2) joint interest in the profits.
WOODHOUSE VS HALILI
The fact that the defendant received money furnished by the plaintiff for the purpose of using
it to purchase the cascoes establishes the first element of the partnership, mutual contribution G.R. No. L-4811 July 31, 1953
to a common stock. For the second element, the fact that the formation of partnership had
FACTS: On November 29, 1947, the Woodhouse entered in a written agreement with\, the
been a subject of negotiation between them, even before the purchase of the first casco, and
most important that they shall organize a partnership for the bottling and distribution of
that both parties intended to purchase the cascoes in common satisfies the requirement that
Mision soft drinks and that Woodhouse was to secure the Mission Soft Drinks franchise for and
there should be an intention on the part of both parties to share the profits. With these, a
in behalf of the proposed partnership and receive 30 per cent of the net profits of the
complete and perfect contract of partnership was entered into by the parties.
business.

1
 Partnership

On that day Woodhouse and Halili went to the United States, a franchise agreement was The Supreme Court ruled that Woodhouse's share of 15 per cent of the net profits shall
entered into the Mission Dry Corporation and granted Halili the exclusive right, license, and continue to be paid while Halili uses the franchise from the Mission Dry Corporation.
authority to produce, bottle, distribute, and sell Mision beverages in the Philippines.

When the bottling plant was already on operation, Woodhouse demanded of Halili that the
partnership papers be executed. In his complaint Woodhouse asks for the execution of the
contract of partnership, an accounting of the profits, and a share thereof of 30 per cent, as well
as damages.

Halili's contends that his consent to the agreement was secured by the representation of
Woodhouse that he was about to become owner of an exclusive bottling franchise, which
representation was false.

The Court of First Instance rendered judgment ordering Halili to render an accounting of the
profits of the bottling and distribution business, subject of the action, and to pay Woodhouse
15 percent thereof.

ISSUE: Whether or not Woodhouse had falsely represented that he had an exclusive franchise
to bottle Mission beverages, and whether this false representation or fraud, if it existed, annuls
the agreement to form the partnership?

HELD: The first draft that Woodhouse’s lawyer, prepared expressly states that Woodhouse had
the exclusive franchise. Woodhouse did actually represent to Halili that he was the holder of
the exclusive franchise and Halili was made to believe, and he actually believed, that
Woodhouse had the exclusive franchise. The main cause that induced Halili to enter into the
partnership agreement with Woodhouse, was the ability of Woodhouse to get the exclusive
franchise to bottle and distribute for the Halili or for the partnership.

While the representation that Woodhouse had the exclusive franchise did not vitiate Halili's
consent to the contract, it was used by Woodhouse to get from Halili a share of 30 per cent of
the net profits. In other words, by pretending that he had the exclusive franchise and
promising to transfer it to Halili, he obtained the consent of the latter to give him a big slice in
the net profits. But when Woodhouse learned about such, he reduced Halili’s share to 15 per
cent.

As to the agreement being executed, Halili may not be compelled against his will to carry out
the agreement nor execute the partnership papers. The law recognizes the individual's
freedom or liberty to do an act he has promised to do, or not to do it, as he pleases.