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126881, October 3, 2000 A joint venture "presupposes generally a parity of standing between the joint co-ventures or
partners, in which each party has an equal proprietary interest in the capital or property
contributed, and where each party exercises equal rights in the conduct of the business. The
FACTS: evidence presented by petitioners falls short of the quantum of proof required to establish a
partnership. In the absence of evidence, we cannot accept as an established fact that Tan
After the second World War, Tan EngKee and Tan Eng Lay, pooling their resources and industry EngKee allegedly contributed his resources to a common fund for the purpose of establishing
together, entered into a partnership engaged in the business of selling lumber and hardware a partnership. Besides, it is indeed odd, if not unnatural, that despite the forty years the
and construction supplies. They named their enterprise "Benguet Lumber" which they jointly partnership was allegedly in existence, Tan EngKee never asked for an accounting. The essence
managed until Tan EngKee's death. Petitioners herein averred that the business prospered due of a partnership is that the partners share in the profits and losses .Each has the right to
to the hard work and thrift of the alleged partners. However, they claimed that in 1981, Tan demand an accounting as long as the partnership exists. A demand for periodic accounting is
Eng Lay and his children caused the conversion of the partnership "Benguet Lumber" into a evidence of a partnership. During his lifetime, Tan EngKee appeared never to have made any
corporation called "Benguet Lumber Company." The incorporation was purportedly a ruse to such demand for accounting from his brother, Tang Eng Lay. We conclude that Tan EngKee
deprive Tan EngKee and his heirs of their rightful participation in the profits of the business. was only an employee, not a partner since they did not present and offer evidence that would
Petitioners prayed for accounting of the partnership assets, and the dissolution, winding up show that Tan EngKee received amounts of money allegedly representing his share in the
and liquidation thereof, and the equal division of the net assets of Benguet Lumber. The RTC profits of the enterprise. There being no partnership, it follows that there is no dissolution,
ruled in favor of petitioners, declaring that Benguet Lumber is a joint venture which is akin to winding up or liquidation to speak of.
a particular partnership. The Court of Appeals rendered the assailed decision reversing the
judgment of the trial court.

ISSUE: Whether the deceased Tan EngKee and Tan Eng Lay are joint adventurers and/or
partners in a business venture and/or particular partnership called Benguet Lumber and as
such should share in the profits and/or losses of the business venture or particular partnership


There was no partnership whatsoever. Except for a firm name, there was no firm account, no
firm letterheads submitted as evidence, no certificate of partnership, no agreement as to profits
and losses, and no time fixed for the duration of the partnership. There was even no attempt
to submit an accounting corresponding to the period after the war until Kee's death in 1984.
It had no business book, no written account nor any memorandum for that matter and no
license mentioning the existence of a partnership. Also, the trial court determined that Tan
EngKee and Tan Eng Lay had entered into a joint venture, which it said is akin to a particular
partnership. A particular partnership is distinguished from a joint adventure, to wit:(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 maycontinue for a number of years; a
partnership generally relates to a continuing business of various transactions of a certain kind.
damages against the respondents, alleging them as employees who misappropriated the
funds. Respondents assert they were partners and not mere employees. Santos claimed that
after discovery of Zabat's activities, he ceased infusing funds thereby extinguishing the

Whether or not the parties' relationship was one of partnership or of employer-employee

Yes they were partners. By the contract of partnership, 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. The "Articles of Agreement" stipulated that the signatories
shall share the profits of the business in a 70-15-15 manner, with petitioner getting the lion's
share. This stipulation clearly proved the establishment of a partnership.

Indeed, the partnership was established to engage in a money-lending business, despite the
fact that it was formalized only after the Memorandum of Agreement had been signed by
petitioner and Gragera.

Fernando Santos vs Spouses Arsenio and Nieves Reyes


This is a petition for review on certiorari assailing CA decision which affirmed the RTC decision.
Santos and Nieves Reyes verbally agreed that Santos would act as financier while Nieves and
Meliton Zabat would act as solicitors for membership and collectors of loan payment. 70% of
the profits would go to Santos while Nieves and Zabat would get 15% each.
It was a lending venture business.

Nieves introduced Gragera of Monte Maria Corp, who obtained short term loans for the
partnership in consideration of commissions. In 1986, Nieves and Zabat executed an
agreement which formalized their earlier verbal agreement. But, Santis and Nieves later
discovered that Zabat engaged in the same lending business. Hence, Zabat was expelled from
the partnership. On June 1987, Santos filed a complaint for recovery of sum of money and
Alberto T. Aguja for petitioner.
Mateo Canonoy for respondents.

REYES, J.B.L., J.:

On September 30, 1950, Filomeno R. Negado filed a complaint in the Justice of the Peace
Court of Carigara, Leyte, against Gonzalo Makabenta for the recovery of a sum of money.
Within the prescribed period, the defendant Gonzalo Makabenta filed his answer with
counterclaim. After issues had been joined, the case was set for trial on September 18, 1951.
At the trial, defendant failed to appear; plaintiff moved that the former be declared in default,
and accordingly, the Justice of the Peace Court declared him in default and ordered the plaintiff
to present his evidence. Judgment was rendered for the plaintiff on November 24, 1951, copy
of which defendant Makabenta received on December 8, 1951, and it was only then that he
learned for the first time that he was declared in default and that judgment by default had
been taken against him. Whereupon, defendant Gonzalo Makabenta appealed to the Court of
First Instance of Leyte (Civil Case No. 1453), where both parties filed their respective pleadings.
When the case was ready for trial, the plaintiff appellee Filomeno R. Negado filed on July 20,
1952 a motion for the dismissal of the appeal on the ground that the appellant had been
declared in default in the Justice of the Peace Court and had, therefore, no standing in court.
The Court of First Instance considered the motion well-taken and dismissed the appeal, holding
that Makabenta had no right to appeal unless the order declaring him in default is first set
aside. A motion for the reconsideration of the order of dismissal was denied, and defendant-
appellant Gonzalo Makabenta came to this court with a petition for certiorari , asking that
after due hearing, the order of the respondent Judge dismissing his appeal be annulled, and
the case set for trial on the merits.

The petition must be granted. The order of default taken against the petitioner Gonzalo
Makabenta in the Justice of the Peace Court of Carigara, Leyte is clearly illegal and without
effect; for although petitioner failed to appear during the trial of the case therein, he filed his
answer to the complaint, and as we have consistently held, the sole ground for default in the
inferior courts is failure to appeal (Veluz vs. Justice of the Peace of Sariaya, 42 Phil., 557;
Quizan vs. Arellano, 90 Phil., 644, Carballo vs. Hon. Demetrio B. Encarnacion, et al., 92 Phil.,
974). By filing his answer in the Justice of the Peace Court, petitioner put in his appearance
and submitted to its jurisdiction; hence, he was not, and should not have been declared, in
G.R. No. L-6450 August 11, 1954
default. While it was discretionary for the court to proceed with the trial of the case in the
absence of petitioner or his counsel, and render judgment on the basis of the evidence
presented by the plaintiff, such judgment was not by default, and petitioner could, under the
law, appeal, as he in fact did appeal, to the Court of First Instance (Carballo vs. Hon. Demetrio
JUAN L. BOCAR, Judge of First Instance of Leyte, and FILOMENO R. NEGADO, respondents.
B. Encarnacion, supra). Consequently, in dismissing petitioner's appeal on the ground that he
had no standing in court unless the order of default is first set aside, the respondent Court
committed a grave abuse of discretion amounting to lack of jurisdiction.

This petition for certiorari to annul the order of dismissal of the appeal is in the nature of a
petition for mandamus to order the Court of First Instance to proceed with the hearing of the
case, and it is not barred by the fact that the order complained of was appealable (Quizan vs.
Arellano, Supra).

Wherefore, the petition for certiorari is granted, the order of the court a quo dismissing
petitioner's appeal is annulled, and the respondent judge is hereby directed to reinstate said
appeal and proceed with the trial of the case on the merits. Costs to be taxed against the
respondent Filomeno R. Negado.

G.R. No. L-12541 August 28, 1959

ROSARIO U. YULO, assisted by her husband JOSE C. YULO, plaintiffs-appellants,

YANG CHIAO SENG, defendant-appellee.

Punzalan, Yabut, Eusebio & Tiburcio for appellants.

Augusto Francisco and Julian T. Ocampo for appellee.


Appeal from the judgment of the Court of First Instance of Manila, Hon. Bienvenido A. Tan,
presiding, dismissing plaintiff's complaint as well as defendant's counterclaim. The appeal is
prosecuted by plaintiff.

The record discloses that on June 17, 1945, defendant Yang Chiao Seng wrote a letter to the
palintiff Mrs. Rosario U. Yulo, proposing the formation of a partnership between them to run
and operate a theatre on the premises occupied by former Cine Oro at Plaza Sta. Cruz, Manila.
The principal conditions of the offer are (1) that Yang Chiao Seng guarantees Mrs. Yulo a
monthly participation of P3,000 payable quarterly in advance within the first 15 days of each
quarter, (2) that the partnership shall be for a period of two years and six months, starting
from July 1, 1945 to December 31, 1947, with the condition that if the land is expropriated or
rendered impracticable for the business, or if the owner constructs a permanent building
thereon, or Mrs. Yulo's right of lease is terminated by the owner, then the partnership shall be
terminated even if the period for which the partnership was agreed to be established has not monthly rentals of said premises at P100. Both parties appealed from said decision and the
yet expired; (3) that Mrs. Yulo is authorized personally to conduct such business in the lobby Court of Appeals, on April 30, 1955, affirmed the judgment.
of the building as is ordinarily carried on in lobbies of theatres in operation, provided the said
business may not obstruct the free ingress and agrees of patrons of the theatre; (4) that after On October 27, 1950, Mrs. Yulo demanded from Yang Chiao Seng her share in the profits of
December 31, 1947, all improvements placed by the partnership shall belong to Mrs. Yulo, but the business. Yang answered the letter saying that upon the advice of his counsel he had to
if the partnership agreement is terminated before the lapse of one and a half years period suspend the payment (of the rentals) because of the pendency of the ejectment suit by the
under any of the causes mentioned in paragraph (2), then Yang Chiao Seng shall have the owners of the land against Mrs. Yulo. In this letter Yang alleges that inasmuch as he is a
right to remove and take away all improvements that the partnership may place in the sublessee and inasmuch as Mrs. Yulo has not paid to the lessors the rentals from August,
premises. 1949, he was retaining the rentals to make good to the landowners the rentals due from Mrs.
Yulo in arrears (Exh. "E").
Pursuant to the above offer, which plaintiff evidently accepted, the parties executed a
partnership agreement establishing the "Yang & Company, Limited," which was to exist from In view of the refusal of Yang to pay her the amount agreed upon, Mrs. Yulo instituted this
July 1, 1945 to December 31, 1947. It states that it will conduct and carry on the business of action on May 26, 1954, alleging the existence of a partnership between them and that the
operating a theatre for the exhibition of motion and talking pictures. The capital is fixed at defendant Yang Chiao Seng has refused to pay her share from December, 1949 to December,
P100,000, P80,000 of which is to be furnished by Yang Chiao Seng and P20,000, by Mrs. Yulo. 1950; that after December 31, 1950 the partnership between Mrs. Yulo and Yang terminated,
All gains and profits are to be distributed among the partners in the same proportion as their as a result of which, plaintiff became the absolute owner of the building occupied by the Cine
capital contribution and the liability of Mrs. Yulo, in case of loss, shall be limited to her capital Astor; that the reasonable rental that the defendant should pay therefor from January, 1951 is
contribution (Exh. "B"). P5,000; that the defendant has acted maliciously and refuses to pay the participation of the
plaintiff in the profits of the business amounting to P35,000 from November, 1949 to October,
In June , 1946, they executed a supplementary agreement, extending the partnership for a 1950, and that as a result of such bad faith and malice on the part of the defendant, Mrs. Yulo
period of three years beginning January 1, 1948 to December 31, 1950. The benefits are to be has suffered damages in the amount of P160,000 and exemplary damages to the extent of
divided between them at the rate of 50-50 and after December 31, 1950, the showhouse P5,000. The prayer includes a demand for the payment of the above sums plus the sum of
building shall belong exclusively to the second party, Mrs. Yulo. P10,000 for the attorney's fees.

The land on which the theatre was constructed was leased by plaintiff Mrs. Yulo from Emilia In answer to the complaint, defendant alleges that the real agreement between the plaintiff
Carrion Santa Marina and Maria Carrion Santa Marina. In the contract of lease it was stipulated and the defendant was one of lease and not of partnership; that the partnership was adopted
that the lease shall continue for an indefinite period of time, but that after one year the lease as a subterfuge to get around the prohibition contained in the contract of lease between the
may be cancelled by either party by written notice to the other party at least 90 days before owners and the plaintiff against the sublease of the said property. As to the other claims, he
the date of cancellation. The last contract was executed between the owners and Mrs. Yulo on denies the same and alleges that the fair rental value of the land is only P1,100. By way of
April 5, 1948. But on April 12, 1949, the attorney for the owners notified Mrs. Yulo of the counterclaim he alleges that by reason of an attachment issued against the properties of the
owner's desire to cancel the contract of lease on July 31, 1949. In view of the above notice, defendant the latter has suffered damages amounting to P100,000.
Mrs. Yulo and her husband brought a civil action to the Court of First Instance of Manila on
July 3, 1949 to declare the lease of the premises. On February 9, 1950, the Municipal Court of The first hearing was had on April 19, 1955, at which time only the plaintiff appeared. The
Manila rendered judgment ordering the ejectment of Mrs. Yulo and Mr. Yang. The judgment court heard evidence of the plaintiff in the absence of the defendant and thereafter rendered
was appealed. In the Court of First Instance, the two cases were afterwards heard jointly, and judgment ordering the defendant to pay to the plaintiff P41,000 for her participation in the
judgment was rendered dismissing the complaint of Mrs. Yulo and her husband, and declaring business up to December, 1950; P5,000 as monthly rental for the use and occupation of the
the contract of lease of the premises terminated as of July 31, 1949, and fixing the reasonable building from January 1, 1951 until defendant vacates the same, and P3,000 for the use and
occupation of the lobby from July 1, 1945 until defendant vacates the property. This decision,
however, was set aside on a motion for reconsideration. In said motion it is claimed that that the agreement set forth in the complaint was one of lease and not of partnership, and
defendant failed to appear at the hearing because of his honest belief that a joint petition for that the partnership formed was adopted in view of a prohibition contained in plaintiff's lease
postponement filed by both parties, in view of a possible amicable settlement, would be against a sublease of the property.
granted; that in view of the decision of the Court of Appeals in two previous cases between
the owners of the land and the plaintiff Rosario Yulo, the plaintiff has no right to claim the The most important issue raised in the appeal is that contained in the fourth assignment of
alleged participation in the profit of the business, etc. The court, finding the above motion, error, to the effect that the lower court erred in holding that the written contracts, Exhs. "A",
well-founded, set aside its decision and a new trial was held. After trial the court rendered the "B", and "C, between plaintiff and defendant, are one of lease and not of partnership. We have
decision making the following findings: that it is not true that a partnership was created gone over the evidence and we fully agree with the conclusion of the trial court that the
between the plaintiff and the defendant because defendant has not actually contributed the agreement was a sublease, not a partnership. The following are the requisites of partnership:
sum mentioned in the Articles of Partnership, or any other amount; that the real agreement (1) two or more persons who bind themselves to contribute money, property, or industry to a
between the plaintiff and the defendant is not of the partnership but one of the lease for the common fund; (2) intention on the part of the partners to divide the profits among themselves.
reason that under the agreement the plaintiff did not share either in the profits or in the losses (Art. 1767, Civil Code.).
of the business as required by Article 1769 of the Civil Code; and that the fact that plaintiff
was granted a "guaranteed participation" in the profits also belies the supposed existence of In the first place, plaintiff did not furnish the supposed P20,000 capital. In the second place,
a partnership between them. It. therefore, denied plaintiff's claim for damages or supposed she did not furnish any help or intervention in the management of the theatre. In the third
participation in the profits. place, it does not appear that she has ever demanded from defendant any accounting of the
expenses and earnings of the business. Were she really a partner, her first concern should
As to her claim for damages for the refusal of the defendant to allow the use of the supposed have been to find out how the business was progressing, whether the expenses were
lobby of the theatre, the court after ocular inspection found that the said lobby was very legitimate, whether the earnings were correct, etc. She was absolutely silent with respect to
narrow space leading to the balcony of the theatre which could not be used for business any of the acts that a partner should have done; all that she did was to receive her share of
purposes under existing ordinances of the City of Manila because it would constitute a hazard P3,000 a month, which can not be interpreted in any manner than a payment for the use of
and danger to the patrons of the theatre. The court, therefore, dismissed the complaint; so the premises which she had leased from the owners. Clearly, plaintiff had always acted in
did it dismiss the defendant's counterclaim, on the ground that the defendant failed to present accordance with the original letter of defendant of June 17, 1945 (Exh. "A"), which shows that
sufficient evidence to sustain the same. It is against this decision that the appeal has been both parties considered this offer as the real contract between them.
prosecuted by plaintiff to this Court.
Plaintiff claims the sum of P41,000 as representing her share or participation in the business
The first assignment of error imputed to the trial court is its order setting aside its former from December, 1949. But the original letter of the defendant, Exh. "A", expressly states that
decision and allowing a new trial. This assignment of error is without merit. As that parties the agreement between the plaintiff and the defendant was to end upon the termination of
agreed to postpone the trial because of a probable amicable settlement, the plaintiff could the right of the plaintiff to the lease. Plaintiff's right having terminated in July, 1949 as found
not take advantage of defendant's absence at the time fixed for the hearing. The lower court, by the Court of Appeals, the partnership agreement or the agreement for her to receive a
therefore, did not err in setting aside its former judgment. The final result of the hearing shown participation of P3,000 automatically ceased as of said date.
by the decision indicates that the setting aside of the previous decision was in the interest of
justice. We find no error in the judgment of the court below and we affirm it in toto, with costs against
In the second assignment of error plaintiff-appellant claims that the lower court erred in not
striking out the evidence offered by the defendant-appellee to prove that the relation between
him and the plaintiff is one of the sublease and not of partnership. The action of the lower
court in admitting evidence is justified by the express allegation in the defendant's answer