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TOCAO VS COURT OF APPEALS managers that Anay was no longer a part of the

company. Anay then demanded that the company be


FACTS: William Belo introduced Nenita Anay to his
audited and her shares be given to her.
girlfriend, Marjorie Tocao. The three agreed to form a
joint venture for the sale of cooking wares. Belo was ISSUE: Whether or not there is a partnership.
to contribute P2.5 million; Tocao also contributed
HELD: Yes, even though it was not reduced to
some cash and she shall also act as president and
writing, for a partnership can be instituted in any
general manager; and Anay shall be in charge of
form. The fact that it was registered as a sole
marketing. Belo and Tocao specifically asked Anay
proprietorship is of no moment for such registration
because of her experience and connections as a
was only for the company’s trade name.
marketer. They agreed further that Anay shall
receive the following: Anay was not even an employee because when they
ventured into the agreement, they explicitly agreed to
10% share of annual net profits
profit sharing this is even though Anay was receiving
6% overriding commission for weekly sales commissions because this is only incidental to her
efforts as a head marketer.
30% of sales Anay will make herself
The Supreme Court also noted that a partner who is
2% share for her demo services
excluded wrongfully from a partnership is an
They operated under the name Geminesse innocent partner. Hence, the guilty partner must give
Enterprise, this name was however registered as a him his due upon the dissolution of the partnership
sole proprietorship with the Bureau of Domestic as well as damages or share in the profits “realized
Trade under Tocao. The joint venture agreement from the appropriation of the partnership business
was not reduced to writing because Anay trusted and goodwill.” An innocent partner thus possesses
Belo’s assurances. “pecuniary interest in every existing contract that was
incomplete and in the trade name of the co-
The venture succeeded under Anay’s marketing
partnership and assets at the time he was wrongfully
prowess.
expelled.”
But then the relationship between Anay and Tocao
soured. One day, Tocao advised one of the branch
An unjustified dissolution by a partner can subject into a partnership with the former after the WWII
him to action for damages because by the mutual were they both pooled in their money in order to
agency that arises in a partnership, the doctrine recapitalize the business. Petitioners wants to
of delectus personae allows the partners to have account, liquidate and wind up the partnership as
the power, although not necessarily the right to well as the equal division of the net assets of the
dissolve the partnership. company. They alleged that since Tan Eng Kee was
conducting the affairs of the company/business with
Tocao’s unilateral exclusion of Anay from the
his brother, Gave orders to the employees, prepared
partnership is shown by her memo to the Cubao
orders for the suppliers, their families beind
office plainly stating that Anay was, as of October 9,
employed in the business and that their families lived
1987, no longer the vice-president for sales of
in the same compound where the Benguet Lumber
Geminesse Enterprise. By that memo, petitioner
Company is found then these establishes the
Tocao effected her own withdrawal from the
existence of a partnership. They also allege that their
partnership and considered herself as having ceased
father was a co-owner of some 80 pieces of G.I.
to be associated with the partnership in the carrying
Sheets and that their father was also receiving
on of the business. Nevertheless, the partnership
money from the company.
was not terminated thereby; it continues until the
winding up of the business. Benguet Lumber Company, represented by Tan Eng
Lay, answered by stating that Tan Eng Kee was
merely an employee of the said company evidenced
HEIRS OF TAN ENG KEE VS COURT OF by payrolls and the SSS coverage of petitioners'
APPEALS father. They also showed the registration of the
business as that of a proprietorship.
The RTC of Baguio ruled that there was a
Facts: The heirs of Tan Eng Kee, composed of his
partnership between the two brothers in the form of a
children and his wife, claims that their father was a
joint-venture. The CA reversed the decision of the
partner of Tan Eng Lay in Benguet Lumber
RTC.
Company. Tan Eng Lay is the brother of the
petitioners' father who accordung to them entered
Issue: WON Tan Eng Kee and Tan Eng Lay were Facts: Julia Buñales died leaving as heirs her
partners in Benguet Lumber? surviving spouse, Lorenzo Oña and her five children.
A civil case was instituted for the settlement of her
Held: No partnership was established as the
state, in which Oña was appointed administrator and
evidence presented was insufficient. Tan Eng Kee
later on the guardian of the three heirs who were still
was merely an employee receiving wages. The
minors when the project for partition was approved.
partnership contract is required to be in writing the
This shows that the heirs have undivided ½ interest
capital of which exceeds P3,000 and the findings of
in 10 parcels of land, 6 houses and money from the
the lower courts reveals the absence of such
War Damage Commission.
contract. Co-ownership or co-possession is not an
indicium of the existence of a partnership. A demand Although the project of partition was approved by the
for a periodic accounting is evidence of a partnership Court, no attempt was made to divide the properties
which was not done by Tan Eng Kee during his and they remained under the management of Oña
lifetime being his right if ever he was a partner. The who used said properties in business by leasing or
documents presented, not validly declared falsified selling them and investing the income derived
by another court, further proves the non-existence of therefrom and the proceeds from the sales thereof in
a partnership relation between the two brothers but real properties and securities. As a result, petitioners’
an employer-employee relationship. Furthermore, properties and investments gradually increased.
petitioners did not offer or present evidence that their Petitioners returned for income tax purposes their
father received amounts pertaining to his share in shares in the net income but they did not actually
the profits of the company. The allegations of receive their shares because this left with Oña who
petitioners merely shows that their father was merely invested them.
involved in the operations of Benguet Lumber but
Based on these facts, CIR decided that petitioners
does not establish in what capacity.
formed an unregistered partnership and therefore,
subject to the corporate income tax, particularly for
years 1955 and 1956. Petitioners asked for
ONA VS CIR
reconsideration, which was denied hence this
petition for review from CTA’s decision.
Issue: respective definite shares of the estate and the
incomes thereof, for each of them to manage and
W/N there was a co-ownership or an unregistered
dispose of as exclusively his own without the
partnership
intervention of the other heirs, and, accordingly, he
W/N the petitioners are liable for the deficiency becomes liable individually for all taxes in connection
corporate income tax therewith. If after such partition, he allows his share
to be held in common with his co-heirs under a
Held:
single management to be used with the intent of
Unregistered partnership. The Tax Court found that making profit thereby in proportion to his share, there
instead of actually distributing the estate of the can be no doubt that, even if no document or
deceased among themselves pursuant to the project instrument were executed, for the purpose, for tax
of partition, the heirs allowed their properties to purposes, at least, an unregistered partnership is
remain under the management of Oña and let him formed.
use their shares as part of the common fund for their
For purposes of the tax on corporations, our National
ventures, even as they paid corresponding income
Internal Revenue Code includes these
taxes on their respective shares.
partnerships —
Yes. For tax purposes, the co-ownership of inherited
The term “partnership” includes a syndicate, group,
properties is automatically converted into an
pool, joint venture or other unincorporated
unregistered partnership the moment the said
organization, through or by means of which any
common properties and/or the incomes derived
business, financial operation, or venture is carried
therefrom are used as a common fund with intent to
on… (8 Merten’s Law of Federal Income Taxation, p.
produce profits for the heirs in proportion to their
562 Note 63; emphasis ours.)
respective shares in the inheritance as determined in
a project partition either duly executed in an with the exception only of duly registered general
extrajudicial settlement or approved by the court in copartnerships — within the purview of the term
the corresponding testate or intestate proceeding. “corporation.” It is, therefore, clear to our mind that
The reason is simple. From the moment of such petitioners herein constitute a partnership, insofar as
partition, the heirs are entitled already to their
said Code is concerned, and are subject to the installments was made. This was granted on the
income tax for corporations. Judgment affirmed. condition that a bond be filed.
Plaintiffs failed in their installment payments. Hence
a request for execution of the warrant of distraint and
GATCHALIAN VS CIR
levy was made. Plaintiffs paid under protest to avoid
the execution.
Facts: Plaintiffs purchased, in the ordinary course of A claim for refund was made by the plaintiffs, which
business, from one of the duly authorized agents of was dismissed, hence the appeal.
the National Charity Sweepstakes Office one ticket
Issue: Whether the plaintiffs formed a partnership
for the sum of two pesos (P2), said ticket
hence liable for income tax.
was registered in the name of Jose Gatchalian and
Company. The ticket won one of the third-prizes in Held: Yes. According to the stipulation facts
the amount of P50,000. the plaintiffs organized a partnership of a civil nature
because each of them put up money to buy a
Jose Gatchalian was required to file the
sweepstakes ticket for the sole purpose of dividing
corresponding income taxreturn covering the prize
equally the prize which they may win, as they did in
won. Defendant-Collector made
fact in the amount of P50,000. The partnership was
anassessment against Jose Gatchalian and Co.
not only formed, but upon the organization thereof
requesting the payment of the sum of P1,499.94
and the winning of the prize, Jose Gatchalian
to the deputy provincial treasurer of Pulilan,
personally appeared in the office of the Philippines
Bulacan. Plaintiffs, however through counsel made a
Charity Sweepstakes, in his capacity as co-partner,
request for exemption. It was denied.
as such collection the prize, the office issued the
Plaintiffs failed to pay the amount due, hence a check for P50,000 in favor of Jose Gatchalian and
warrant of distraint and levy was company, and the said partner, in the same capacity,
issued. Plaintiffs paid under protest a part of the tax collected the said check. All these circumstances
and penalties to avoid the effects of the warrant. A repel the idea that the plaintiffs organized and
request that the balance be paid by plaintiffs in formed a community of property only.
2. No. In a contract of loan once the money is
received by the debtor, ownership over the same is
LIWANAG VS COURT OF APPEALS
transferred. Being the owner, the borrower can
Facts: Liwanag asked Isidora Rosales to join her dispose of it for whatever purpose he may deem
and Thelma Tagbilaran in the business of buying and proper
selling cigarettes. Under their agreement, Rosales
would give the money needed to
buy the cigarettes while Liwanag and Tabligan would EVANGELISTA & CO v. ABAD SANTOS
act as her agents, with acorresponding 40%
Doctrine: It is not disputed that the provision
commission to her if the goods are sold; otherwise
against the industrial partner engaging in business
the money wouldbe returned to Rosales. Rosales
for himself seeks to prevent any conflict of interest
gave several cash advances amounting to 633,650.
between the industrial partner and the partnership,
Money was misappropriated. Rosales files a
and to insure faithful compliance by said partner with
complaint of estafa against them.
this prestation.
Issue:
Facts: On Octorber 09, 1954, a co-partnership was
1. WON the parties entered into a partnership formed named “Evangelista and Co.” On June 07,
agreement; 1955, the Articles of the Co-partnership was
amended in order to include herein respondent
2. If in the negative, WON the transaction is a simple
Estrella Abad Santos as an industrial partner.
loan
Furthermore, in the said amended article, it was
Held: agreed upon that the profits and losses shall be
divided as follows: (1) 70% for the first three (3)
1. No. Even assuming that a contract of partnership
partners; and (2) 30% for respondent Estrella Abad
was indeed entered into by and between the parties,
Santos.
when money or property have been received by a
partner for a specific purpose and he later On December 17, 1963, herein respondent filed suit
misappropriated it, such partner is guilty of estafa. against the three other partners in the Court of First
Instance of Manila, alleging that the partnership,
which was also made a party-defendant, had been and participation, as an alleged industrial partner, in
paying dividends to the partners except to her; and the partnership Evangelista & Co., and its profits or
that notwithstanding her demands the defendants net income.
had refused and continued to refuse and let her
Issue:
examine the partnership books or to give her
information regarding the partnership affairs to pay 1.) Whether or not the respondent Estrella Abad
her any share in the dividends declared by the Santos is an industrial partner or merely a profit
partnership. She therefore prayed that the sharer (as alleged by petitioners) entitled to 30% of
defendants be ordered to render accounting to her of the net profits that may be realized by the
the partnership business and to pay her partnership from June 07, 1955 until her mortgage
corresponding share in the partnership profits after loan shall be fully paid?
such accounting, plus attorney's fees and costs.
2.) Whether or not respondent as a Judge of the
The defendants, in their answer, alleged the City Court of Manila is engaged in business and
following: (1) the amended Articles of Co-partnership thereby lawfully excluded and deprived of, her
did not express the true agreement of the parties, alleged share, interests and participation, as an
which was that the plaintiff was not an industrial alleged industrial partner, in the partnership
partner; (2) that she did not in fact contribute industry Evangelista & Co., and its profits or net income
to the partnership; and (3) that her share of 30% was pursuant to Article 1789.
to be based on the profits which might be realized by
Ruling:
the partnership only until full payment of the loan
which it had obtained in December, 1955 from the 1.) The Supreme Court affirmed the facts
Rehabilitation Finance Corporation in the sum of concluded by the Court of Appeals that respondent
P30,000, for which the plaintiff had signed a Estrella Santos is an industrial partner because the
promissory note as co-maker and mortgaged her Articles of the co-partnership indubitably show the
property as security; and (4) that in any event the respondent is an industrial partner. Also by the fact
respondent (as a Judge of the City Court of that from June 7, 1955 up to the filing of their answer
Manila)was lawfully (See Article 1789) excluded to the complaint on February 8, 1964 — or a period
from, and deprived of, her alleged share, interests of over eight (8) years — appellants did nothing to
correct the alleged false agreement of the parties (1) If he is wrongfully excluded from the partnership
contained in the same. business or possession of its property by his co-
partners;
2.) It is not disputed that the provision
against the industrial partner engaging in business (2) If the right exists under the terms of any
for himself seeks to prevent any conflict of interest agreement;
between the industrial partner and the partnership,
(3) As provided by article 1807;
and to insure faithful compliance by said partner with
this prestation. There is no pretense, however, even (4) Whenever other circumstance render it just and
on the part of the appellee is engaged in any reasonable.
business antagonistic to that of appellant
We find no reason in this case to depart from the rule
company, since being a Judge of one of the
which limits this Court's appellate jurisdiction to
branches of the City Court of Manila can hardly be
reviewing only errors of law, accepting as conclusive
characterized as a business.
the factual findings of the lower court upon its own
The Supreme Court further held: assessment of the evidence.”
“What has gone before persuades us to hold with the
lower Court that appellee is an industrial partner of
RAMNANI VS COURT OF APPEALS
appellant company, with the right to demand for a
formal accounting and to receive her share in the net FACTS: Ishwar Jethmal Ramnani and his wife
profit that may result from such an accounting, which Sonya had their main business based in New York.
right appellants take exception under their second Ishwar received US $150,000.00 from his father-in-
assigned error. Our said holding is based on the law in Switzerland.
following article of the New Civil Code:
In 1965, Ishwar Jethmal Ramnani sent the amount of
'ART. 1899. Any partner shall have the right to a US $150,000.00 to Choithram in two bank drafts of
formal account as to partnership affairs: US$65,000.00 and US$85,000.00 for the purpose of
investing the same in real estate in the Philippines.
Subsequently, spouses Ishwar executed a general spouses in favor of Nirmla Ramnani, the wife of
power of attorney appointing Ishwar’s full blood Choitram’s son, Moti.
brothers Choithram and Navalrai as attorneys-in-fact,
Ortigas also executed the corresponding deeds of
empowering them to manage and conduct their
sale in favor of Nirmla and the TCT ISSUEd in her
business concerns in the Philippines.
favour..
Choithram, as attorney-in-factr, entered into two
Thus, spouses Ishwar filed a complaint in the Court
agreements for the purchase of two parcels of land
of First Instance of Rizal against Choithram and
located in Pasig Rizal from Ortigas & Company, Ltd.
spouses Nirmla and Moti (Choithram et al.) and
Partnership (Ortigas Ltd.) with a total area of
Ortigas Ltd. for reconveyance of said properties or
approximately 10,048 square meters.
payment of its value and damages.
Three buildings were constructed thereon and were
Trial court dismissed the complaint ruling that the
leased out by Choithram as attorney-in-fact of
lone testimony of Ishwar regarding the cash
spouses Ishwar. Two of these buildings were later
remittance is unworthy of faith and credit because
burned.
the cash remittance was made before the execution
In 1970 Ishwar asked Choithram to account for the of the general power of attorney. Ishwar also failed to
income and expenses relative to these properties corroborate this lone testimony and did not exhibit
during the period 1967 to 1970. any commercial document as regard to the alleged
remittances.
Choithram failed and refused to render such
accounting which prompted Ishwar to revoke the It believed the claim of Choitram that he and Ishwar
general power of attorney. entered into a temporary arrangement in order to
enable Choithram, then a British citizen, to purchase
Choithram and Ortigas Ltd. were duly notified by
the properties in the name of Ishwar who was an
notice in writing of such revocation. It was also
American citizen and who was then qualified to
registered with the Securities and Exchange
purchase property in the Philippines under the then
Commission and published in The Manila Times.
Parity Amendment.
Nevertheless, Choithram as such attorney-in-fact of
Ishwar, transferred all rights and interests of Ishwar
Upon appeal, the CA reversed the decision and gave of donation and also mortgaged the properties under
credence to Ishwar. litigation for 3 million USD to a shell partnership with
a mere capital of 100 USD.
It upheld the validity of Ishwar’s testimony and gave
cognizance to a letter written by Choihtram imploring The Supreme Court affirms the findings of the Court
Ishwar to renew the power of attorney after it was of Appeals.
revoked. It states therein that Choithram reassures
ISSUE: Whether or not there was a partnership
his brother that he is not after his money and that the
between the brothers Ishwar and Choithram
revocation is hurting the reputation of Ishwar.
Choithram also made no mention of his claimed HELD: Yes, Even without a written agreement, the
temporary arrangement in the letter.. scenario is clear. Spouses Ishwar supplied the
capital of $150,000.00 for the business. They
The CA ruled that Choithram is also estopped in pais
entrusted the money to Choithram to invest in a
or by deed from claiming an interest over the
profitable business venture in the Philippines. For
properties. Because of Choitram’s admissions from
this purpose they appointed Choithram as their
(1) power of attorney, (2) the Agreements, and (3)
attorney-in-fact.
the Contract of Lease
Choithram in turn decided to invest in the real estate
It furthermore HELD that Choithram's 'temporary
business. He bought the two (2) parcels of land in
arrangement, by which he claimed purchasing the
question from Ortigas as attorney-in-fact of Ishwar-
two (2) parcels in question in 1966 and placing them
Instead of paying for the lots in cash, he paid in
in the name of Ishwar who is an American citizen
installments and used the balance of the capital
circumvents the disqualification provision of aliens
entrusted to him, plus a loan, to build two buildings.
acquiring real properties in the Philippines.
Although the buildings were burned later, Choithram
Upholding the supposed "temporary arrangement"
was able to build two other buildings on the property.
with Ishwar would be sanctioning the perpetration of
He rented them out and collected the rentals.
an illegal act and culpable violation of the
Through the industry and genius of Choithram,
Constitution.
Ishwar's property was developed and improved into
During the pendency of the case, Choithram made what it is now—a valuable asset worth millions of
several attempts to dispose of his properties by way pesos.
We have a situation where two brothers engaged in PNB VS LO
a business venture. One furnished the capital, the
Facts:
other contributed his industry and talent. Justice and
equity dictate that the two share equally the fruit of 1916 – Severo Eugenio Lo and Ng Khey Ling
their joint investment and efforts. Perhaps this together with J.A. Say Lian Ping, Ko Tiao Hun, On
Solomonic solution may pave the way towards their Yem Ke Lam and Co Sieng Peng formed a
reconciliation. Both would stand to gain. No one commercial partnership under the name of “Tai Sing
would end up the loser. After all, blood is thicker than Co.,” with a capital of P40,000 contributed by said
water. partners.
However, because of the devious machinations and Articles of Copartnership states that:
schemes that Choithram employed he should pay
Partnership was to last for 5 years from after the
moral and exemplary damages as well as attorney's
date of its organization
fees to spouses Ishwar.
Purpose: to do business in the City of Iloilo or in any
ISSUE: Whether or not Ortigas Ltd. is liable.
other part of the Philippines the partners might
HELD: Yes, because Ortigas had several notices desire; purchase and sale of merchandise, goods,
of the revocation. Despite said notices, Ortigas and native, as well as Chinese and Japanese
nevertheless acceded to the representation of products
Choithram, as alleged attorney-in-fact of Ishwar, to
J.A. Say Lian Ping was appointed general manager
assign the rights of petitioner Ishwar to Nirmla. While
the primary blame should be laid at the doorstep of A. Say Lian Ping executed a power of attorney in
Choithram, Ortigas is not entirely without fault. It favor of A. Y. Kelam, authorizing him to act in his
should have required Choithram to secure another stead as manager and administrator of “Tai Sing &
power of attorney from Ishwar. For recklessly Co.” and to obtain a loan of P8,000 in current
believing the pretension of Choithram that his power account from PNB.
of attorney was still good, it must, therefore, share in
Kelam mortgaged certain personal property of the
the latter's liability to Ishwar.
partnership.
The credit was renewed several times and Kelam, as by the board nor was the person who subscribed
attorney-in-fact of “Tai Sing & Co., executed a chattel said contract authorized under the articles of
mortgage in favor of PNB as security as security for copartnership
a loan P20,000.
Trial Court: in favor of PNB
This mortgage was again renewed and Kelam as
ISSUE:
attorney-in-fact of “Tai Sing & Co.” executed another
chattel mortgage for the said sum of P20,000. Whether or not “Tai Sing & Co.” is a general
partnership in that the appellants can be held liable
1920 – Yap Seng, Severo Lo, Kelam and Ng Khey
to pay PNB
Ling, the latter represented by M. Pineda Tayenko,
executed a power of attorney in favor of Sy Tit. HELD: Yes. “Tai Sing & Co.” is a general partnership
By virtue of the power of attorney, Sy Tit RATIO:
representing “Tai Sing & Co.” obtained a credit of
Appellants admit and it appears from the articles of
P20,000 from PNB in 1921 and executed a chattel
copartnership that “Tai Sing & Co.” is a general
mortgage on certain personal property belonging to
partnership and it was registered in the mercantile
the partnership.
register of Iloilo.
Defendants had been using this commercial credit in
The fact that the partners opt to use “Tai Sing & Co.”
a current account with the plaintiff bank from 1918 –
as the firm name does not affect the liability of the
1922 and as of December 31, 1924 the debit
general partners to third parties under Article127 of
balance of this account P 20, 239.
the Code of Commerce. Jurisprudence states that:
PNB claims in the complaint this amount and an
The object of article 126 of the Code of Commerce in
interest of P16, 518.74.
requiring a general partnership to transact business
Eugenio Lo’s defense: under the name of all its members, of several of
them, or of one only, is to protect the public from
“Tai Sing & Co.” was not a general partnership.
imposition and fraud
Commercial credit in current account which Tai Sing
& Co. obtained from PNB had not been authorized
It is for the protection of the creditors rather than of This is in accordance with Article 127 of the Code of
the partners themselves. Commerce “all the members of a general
partnership, be they managing partners thereof or
The law must be unlawful and unenforceable only as
not, shall be personally and solidarily liable with all
between the partners and at the instance of the
their property, for the results of the transactions
violating party, but not in the sense of depriving
made in the name and for the account of the
innocent parties of their rights who may have dealt
partnership, under the signature of the latter, and by
with the offenders in ignorance of the latter having
a person authorized to use it.”
violated the law.
Contracts entered into by commercial associations
defectively organized are valid when voluntarily COMPANIA MARITAMA VS MUNOZ
executed by the parties, and the only question is
whether or not they complied with the agreement.
Therefore, the defendants cannot invoke in their FACTS: In 1905, Francisco Muñoz, Emilio Muñoz,
defense the anomaly in the firm name which they and Rafael Naval formed an ordinary general
themselves adopted. mercantile partnership in accordance with the Code
of Commerce. They named the partnership
As to the alleged death of the manager, Say Lian
“Francisco Muñoz & Sons”. Francisco was the
Ping before Kelam executed the contracts of
capitalist partner while the other two were industrial
mortgage with PNB, this would not affect the liability
partners. In the articles of partnership, it was agreed
of the partnership
upon by the three that for profits, Francisco shall
Kelam was a partner who contracted in the name of have a 3/4th share while the other two would have
the partnership and the other partners did not object 1/8th each. For losses, only Francisco shall bear it.
Lo, Khey Ling, and Yap Seng appointed Sy Tit as Later, the partnership was sued by La Compañia
manager, and he obtained from PNB the credit in Martitama for collection of sum of money amounting
current account to P26,828.30. The partnership lost the case and
was ordered to make said payment; that in case the
Trial Court correctly held defendants to be jointly and
severally liable to PNB
partnership can’t pay the debt, all the partners HELD: Yes. The controlling law is Article 127. There
should be liable for it. is no injustice in imposing this liability upon the
industrial partners. They have a voice in the
The ruling is in accordance with Article 127 of the
management of the business, if no manager has
Code of Commerce which states:
been named in the articles; they share in the profits
All the members of the general copartnership, be and as to third persons it is no more than right that
they or be they not managing partners of the same, they should share in the obligations. It is admitted
are liable personally and in solidum with all their that if in this case there had been a capitalist partner
property for the results of the transactions made in who had contributed only P100 he would be liable for
the name and for the account of the partnership, this entire debt of P26,000.
under the signature of the latter, and by a person
Article 141 relates exclusively to the settlement of
authorized to make use thereof. (emphasis supplied)
the partnership affairs among the partners
Francisco now argues that the industrial partners themselves and has nothing to do with the liability of
should NOT be liable pursuant to Article 141 of the the partners to third persons; that each one of the
Code of Commerce which states: industrial partners is liable to third persons for the
debts of the firm; that if he has paid such debts out of
Losses shall be charged in the same
his private property during the life of the partnership,
proportion among the partners who have contributed
when its affairs are settled he is entitled to credit for
capital, without including those who have not, unless
the amount so paid, and if it results that there is not
by special agreement the latter have been
enough property in the partnership to pay him, then
constituted as participants therein. (emphasis
the capitalist partners must pay him.
supplied)
In relation to this, the Supreme Court noted that
partnerships under the Civil Code provides for a
ISSUE: Whether or not the industrial partners are scenario where all partners are industrial partners
liable to third parties like La Compañia Martitama. (like when it is a partnership for the exercise of a
profession). In such case, if it is permitted that
industrial partners are not liable to third persons then
such third persons would get practically nothing from “Heirs of Hugo Lim”, making the said mortgage void
such partnerships if the latter is indebted. because it was executed by them without authority
from the partnership. Judgment was rendered by the
trial court declaring void the mortgage in question
SANTIAGO SYJUCO VS CASTRO because it was executed by the Lims without
authority from the partnership which was and had
been the exclusive owner of the mortgaged property,
FACTS: Eugenio Lim, along with his brothers, all and making permanent an injunction against the
hereinafter collectively called the Lims, borrowed foreclosure sale. Syjuco filed an instant petition for
from petitioner Santiago Syjuco, Inc. (hereinafter, certiorari, prohibition and mandamus. It prays in its
Syjuco only) the sum of 800,000.00. The loan was petition that the default judgment rendered against it
given on the security of a first mortgage on property by Judge Castro be annuled on the ground of,
registered in the names of said borrowers as owners among others, estoppel, res judicata, and Article
in common. Thereafter, additional loans on the 1819 of the Civil Code.
same security were obtained by the Lims from
ISSUE:
Syjuco, so that the aggregate of the loans stood at
2,460,000.00, exclusive of interest. When the Whether or not the lower court erred in deciding the
obligation case.
matured,the Lims failed to pay it despite demands th
HELD:
erefor and consequently, Syjuco caused extra-
judicialproceedings for the foreclosure of the Yes. The court holds that the respondent partnership
mortgage and for the Sheriff of Manila to execute the was inescapably chargeable with knowledge of the
scheduled auction sale. The attempt to foreclose mortgage executed by all the partners thereof, and
triggered off a legal battle that has dragged on for 20 therefore its silence and failure to impugn said
years, through 5 cases in the courts, one of which mortgage within a reasonable time, let alone a space
the respondents advocated the theory that the of more than 17 years, brought into play the doctrine
mortgage, which they had individually constituted, of estoppel to preclude any attempt to avoid the
in fact no longer belonged to them, having mortgage as allegedly unauthorized. Equally or even
been earlier deeded over by them to the partnership, more preclusive of the respondent partnership’s
claim to the mortgaged FACTS:
propertyis the last paragraph of Art. 1819 of the Civil Elmo Muñasque, in behalf of “Galan and Muñasque”
Code, which contemplates a situation similar to the partnership as Contractor,entered into a written
case at bar. It states that ‘where the title to real contract with Tropical Commercial Co., through its
property is in the names of all the partners, a branch
conveyance executed by all the partners passes all manager Ramon Pons, for remodelling of Tropical’s
their rights in such property.’ Consequently, those building in Cebu. The consideration for the entire
members' acts, declarations and omissions cannot services is P25,000 to be paid: 30% upon signing
be deemed to be simply the individual acts of said of contract, and balance on 3 equal instalments of
members, but in fact and in law, those of the P6,000 every 15working days. First payment of
partnership. Finally, the Court emphasizes that the check worth P7,000 was payable to Muñasque,
right of the Lims to assert the existence of the who indorsed it to Galan for purposes of depositing
partnership could have been stressed at the time the amount and paying the materials already used.
they instituted their first action, considering that the But since Galan allegedly misappropriated
actions involved property supposedly belonging to it, P6,183.37 of the check for personal use, Muñasque
and therefore, the partnership was the real party in refused to indorse the second check worth
interest. What was done by them was to split their P6,000. Galan then informed Tropical
cause of action in violation of the well known rule of the “misunderstanding” between him and Muñasq
that only one suit may be instituted for a single cause ue and this prompted Tropical to change the payee o
of action. Hence, the court orders that the assailed f the second check from Muñasque to “Galan andAs
judgment be declared null and void and the sociates” (the duly registered name of Galan and Mu
complaint be dismissed from being barred by prior ñasque partnership).Despite the misappropriation,
judgment and estoppel, and for lack of merit. Muñasque alone was able to finish the project. The
two remaining checks were properly issued to
Muñasque. Muñasque filed a complaint for payment
MUNASQUE VS COURT OF APPEALS of sum of money plus damages against Galan,
Tropical and Pons for the amount covered by the first
and second checks.
Cebu Southern Hardware Co and Blue Diamond Gla
ss Palace were allowed as intervenors having legal 2.YES. Muñasque and Galan were partners when
interest claiming against Muñasue and Galan for the debts to the intervenors were incurred, hence,
material sused. they are also liable to third persons who extended
credit to their partnership.
TC:-Muñasque and Pons jointly and severally liable
to intervenors-Tropical and Pons absolved
CA affirmed with modification:-Muñasque and Pons DELUAO VS CASTEEL
jointly liable to intervenors
FACTS: Casteel was the original occupant and
Issue: applicant of a fishpond area since before the last
World War. He wanted to preclude subsequent
1.W/N Muñasque and Galan are partners?
applicants from entering and spreading themselves
2.W/N payment made by Tropical to Galan was within the area by expanding his occupation thereof
“good payment”? by the construction of dikes and the cultivation of
marketable fishes.-Thus, he borrowed P27, 000 from
3.W/N Galan should shoulder exclusively the amount
the Deluaos to finance needed improvements for the
s payable to theintervenors (granting he
fishpond, and was compelled by force of this
misappropriated the amount from the two checks)?
circumstance to enter into the contract of
HELD: partnership, with an agreement to divide the fishpond
after the award. Eventually, Casteel administered the
1.YES. Tropical had every right to presume the
said property and single-handedly opposed rival
existence of the partnership:
applicants who occupied portions of the fishpond
a.Contract states that agreement was entered into by area. He relentlessly pursued his claim to the said
“Galan andMuñasque” area up to the Office of the DANR Secretary, until it
was finally awarded to him.
b.The first check issue in the name of Muñasque
was indorsed to Galan The relationship was made to Issue: WON the parties can now validly divide the
appear as a partnership. said fishpond as agreed upon by them? NO.
Ruling:
Spouses Deluaos’ statement that the beneficial right observed that, despite the decisions of the DANR
over the fishpond in question is the "specific Secretary in DANR cases 353 and 353-B awarding
partnership property" contemplated by art. 1811 of the area to Casteel, and despite the latter's proposal
the Civil Code is incorrect. A reading of the said that they divide the fishpond between them,
provision will show that what is meant is tangible the Deluaos unequivocally expressed in their
property, such as a car, truck or a piece of land, but aforequoted letter their decision not to share the
not an intangible thing such as the beneficial right to fishpond with Casteel. This produced the dissolution
a fishpond. If what they have in mind is the fishpond of the entire contract of partnership (to jointly
itself, they are grossly in error. A fishpond of the administer and to divide the fishpond after the
public domain can neve rbe considered a specific award) between the parties, not to mention its
partnership property because only its use and automatic dissolution for being contrary to law.
enjoyment — never its title or ownership — is PetItioner’s final proposition that only by giving effect
granted to specific private persons.-Since we held as to the confirmed intention of the parties may the
illegal the second part of the contract of partnership cause of equity and justice be served, we must
between the parties to divide the fishpond between state that since the contract of service is contrary to
them after the award, a fortiori, no rights or law and, therefore, null and void, it is not and can
obligations could have arisen therefrom. never be considered as the law between the parties.
Inescapably, no trust could have resulted because
trust is founded on equity and can never result from
an act violative of the law. Art. 1452 of the Civil Code LIM TANHU VS RAMOLETE
does not support the appellees' stand because it
contemplates an agreement between two or more FACTS:
persons to purchase property — capable of private
ownership — the legal title of which is to be taken Private respondent Tan Put alleged that she is the
in the name of one of them for the benefitof all. In the widow of Tee Hoon Lim Po Chuan, who was a
case at bar, the parties did not agree to purchase the partner and practically the owner who has controlling
fishpond, and even if they did, such is prohibited by interest of Glory Commercial Company and a
law, a fishpond of the public domain not being Chinese Citizen until his death. Defendant Antonio
susceptible of private ownership.-It must be
Lim Tanhu and Alfonso Leonardo Ng Sua were of the latter sold her drugstore for P125,000.00
partners in name but they were mere employees of which amount she gave to her husband as
Po Chuan and were naturalized Filipino investment in Glory Commercial Co. sometime in
Citizens. Tan Put filed complaint against spouses- 1950; that after the investment of the above-stated
petitoner Lim Tanhu and Dy Ochay including their amount in the partnership its business flourished and
son Tech Chuan and the other spouses-petitoner Ng it embarked in the import business and also engaged
Sua and Co Oyo including also their son Eng Chong in the wholesale and retail trade of cement and GI
Leonardo, that through fraud and machination took sheets and under huge profits.
actual and active management of the partnership
and that she alleged entitlement to share not only in Defendants interpose that Tan Put knew and was
the capital and profits of the partnership but also in are that she was merely the common-law wife of Tee
the other assets, both real and personal, acquired by Hoon. Tan Put and Tee Hoon were childless but the
the partnership with funds of the latter during its former had a foster child, Antonio Nunez.
lifetime."
According to the petitioners, Ang Siok Tin is the ISSUE: Whether Tan Put, as she alleged being
legitimate wife, still living, and with whom Tee Hoon married with Tee Hoon, can claim from the company
had four legitimate children, a twin born in 1942, and of the latter’s share.
two others born in 1949 and 1965, all presently
residing in Hong Kong. Tee Hoon died in 1966 and HELD:
as a result of which the partnership was dissolved
and what corresponded to him were all given to his Under Article 55 of the Civil Code, “the declaration of
legitimate wife and children. the contracting parties that they take each other as
husband and wife "shall be set forth in an instrument"
Tan Put prior of her alleged marriage with Tee Hoon signed by the parties as well as by their witnesses and
on 1949, was engaged in the drugstore business; the person solemnizing the marriage. Accordingly, the
that not long after her marriage, upon the suggestion primary evidence of a marriage must be an authentic
copy of the marriage contract”. While a marriage may had also settled property interests in the payment of
also be proved by other competent evidence, the P40,000.
absence of the contract must first be satisfactorily
IN VIEW OF ALL THE FOREGOING, the petition is
explained. Surely, the certification of the person who
granted. All proceedings held in respondent court in
allegedly solemnized a marriage is not admissible
its Civil Case No. 12328 subsequent to the order of
evidence of such marriage unless proof of loss of the
dismissal of October 21, 1974 are hereby annulled
contract or of any other satisfactory reason for its non-
and set aside, particularly the ex-parteproceedings
production is first presented to the court. In the case
against petitioners and the decision on December 20,
at bar, the purported certification issued by a Mons.
1974. Respondent court is hereby ordered to enter an
Jose M. Recoleto, Bishop, Philippine Independent
order extending the effects of its order of dismissal of
Church, Cebu City, is not, therefore, competent
the action dated October 21, 1974 to herein
evidence, there being absolutely no showing as to
petitioners Antonio Lim Tanhu, Dy Ochay, Alfonso
unavailability of the marriage contract and, indeed, as
Leonardo Ng Sua and Co Oyo. And respondent court
to the authenticity of the signature of said certifier, the
is hereby permanently enjoined from taking any
jurat allegedly signed by a second assistant provincial
further action in said civil case gave and except as
fiscal not being authorized by law, since it is not part
herein indicated. Costs against private respondent.
of the functions of his office. Besides, inasmuch as the
bishop did not testify, the same is hearsay.
An agreement with Tee Hoon was shown and signed EUROTECH INDUSTRIAL VS CUIZON
by Tan Put that she received P40,000 for her FACTS: Eurotech is engaged in the business of
subsistence when they terminated their relationship of importation and distribution of various European
common-law marriage and promised not to interfere industrial equipment. It has as one of its customers
with each other’s affairs since they are incompatible Impact Systems Sales which is a sole proprietorship
owned by Erwin Cuizon.
and not in the position to keep living together
permanently. Hence, this document not only proves Eurotech
that her relation was that of a common-law wife but sold to Impact Systems various products allegedly a
mounting to P91,338.00. Cuizonssought to buy from WON Edwin exceeded his authority when he signed
Eurotech 1 unit of sludge pump valued at the Deed of Assignment thereby binding himself
P250,000.00 with Cuizons making a down payment personally to pay the obligations to Eurotech
of P50,000.00. When the sludge pump arrived from
the United Kingdom, Eurotech refused to deliver the HELD:
same to Cuizons No.
without their having fully settled their indebtedness to
Eurotech. Thus, Edwin Cuizon and Alberto de Jesus, Edwin insists that he was a mere agent of Impact
general manager of Eurotech, executed a Deed of Systems which is owned by Erwin and that his status
Assignment of receivables in favor of Eurotech. as such is known even to Eurotech as it is alleged in
the Complaint that he is being sued in his capacity
Cuizons, despite the existence of the Deed of as the sales manager of the said business venture.
Assignment, proceeded to collect from Toledo Power Likewise, Edwin points to the Deed of Assignment
Company the amount of P365,135.29. Eurotech
which clearly states that he was acting as a
made several demands upon Cuizons to pay their
representative of Impact Systems in said transaction.
obligations. As a result, Cuizons were able to make
partial payments to Eurotech. Cuizons’ total Art. 1897. The agent who acts as such is not
obligations stood at P295,000.00 excluding interests personally liable to the party with whom he contracts,
and attorney’s fees. unless he expressly binds himself or exceeds the
limits of his authority without giving such party
Edwin Cuizon alleged that he is not a real party in sufficient notice of his powers.
interest in this case. According to him, he was acting In a contract of agency , a person binds himself to
as mere agent of his principal, which was the Impact render some service or to do something in
Systems, in his transaction with Eurotech and the representation or on behalf of another with
latter was very much aware of this fact. the latter’s consent. Its purpose is to extend the
ISSUE: personality of the principal or the party for whom
another acts and from whom he or she derives the
authority to act. The basis of agency is
representation, that is, the agent acts for and on
behalf of the principal on matters within the scope of in full, the payment for Impact Systems’
his authority and said acts have the same legal effect indebtedness. Impact Systems desperately needed
as if they were personally executed by the principal. the sludge pump for its business since after it paid
the amount of P50,000.00 as down payment it still
Elements of the contract of agency: (1) consent,
persisted in negotiating with Eurotech which
express or implied, of the parties to establish the
culminated in the execution of the Deed of
relationship; (2) the object is the execution of a
Assignment of its receivables from Toledo Power
juridical act in relation to a third person; (3) the
Company. The significant amount of time spent on
agent acts as a representative and not for himself;
the negotiation for the sale of the sludge pump
(4) the agent acts within the scope of his authority
underscores Impact Systems’ perseverance to get
An agent, who acts as such, is not personally liable hold of the said equipment. Edwin’s participation in
to the party with whom he contracts. There are the Deed of Assignment was “reasonably necessary”
2instances when an agent becomes personally liable or was required in order for him to protect the
to a third person. The first is when he expressly business of his principal
binds himself to the obligation and the second is
when he exceeds his authority. In the last instance,
BALATAZAR VS OMBUDSMAN
the agent can be held liable if he does not give the
third party sufficient notice of his powers. Edwin does FACTS: Paciencia Regala owns a seven (7)-hectare
not fall within any of the exceptions contained in Art. fishpond located at Sasmuan, Pampanga. Her
1897. Attorney-in-Fact Faustino R. Mercado leased the
fishpond to Eduardo Lapid for a three (3)-year
In the absence of an agreement to the contrary, a
period. Lessee Eduardo Lapid in turn sub-leased the
managing agent may enter into any contracts that
fishpond to Rafael Lopez during the last seven
he deems reasonably necessary or requisite for
(7) months of the original lease. Ernesto Salenga
the protection of the interests of his principal
was hired by EduardoLapid as fishpond watchman
entrusted to his management.
(bante-encargado). In the sub-lease, Rafael Lopez
Edwin Cuizon acted well-within his authority when he rehired respondent Salenga. Ernesto Salenga, sent
signed the Deed of Assignment. Eurotech refused to the demand letter to Rafael Lopez and Lourdes
deliver the 1 unit of sludge pump unless it received, Lapid for unpaid salaries and non-payment of the
10% share in the harvest. Salenga was promted to as Provincial Agrarian Adjudicator has no jurisdiction
file a Complaint over a complaint where there exist no tenancy
before the Provincial Agrarian Reform Adjudication relationship?
Board (PARAB), Region III, San Fernando,
HELD: The "real-party-in interest" is "the party who
Pampanga docketed as DARAB Case No. 552-P’93
stands to be benefited or injured by the judgment in
entitled Ernesto R. Salenga v. Rafael L. Lopez and
the suit or the party entitled to the avails of the suit.
Lourdes L. Lapid for Maintenance of Peaceful
The Complaint-Affidavit filed before the Office of the
Possession, Collection of Sum of Money and
Ombudsman, there is no question on his authority
Supervision of Harvest. Pending resolution of the
and legal standing. The Ombudsman can act on
agrarian case, the instant case was instituted by
anonymous complaints and motu proprio inquire into
petitioner Antonio Baltazar, an alleged
alleged improper official acts or omissions from
nephew of Faustino Mercado, through a Complaint-
whatever source, e.g., a newspaper. Faustino
Affidavit against private respondents
Mercado, is an agent himself and as such cannot
before the Office of theOmbudsman which was
further delegate his agency to another. An agent
docketed as OMB-1-94-3425 entitled Antonio B.
cannot delegate to another the same agency. Re-
Baltazar v. Eulogio Mariano, Jose Jimenez,
delegation of the agency would be detrimental to the
Jr.,Toribio Ilao, Jr. and Ernesto Salenga for violation
principal as the second agent has no privity of
of RA 3019.
contract with the former. In the instant case,
Petitioner maintains that respondent Ilao, Jr. had petitioner has no privity of contract with Paciencia
no jurisdiction to hear and act on DARAB Case No. Regala, owner of the fishpond and principal of
552-P’93 filed by respondent Salenga as there was Faustino Mercado. The facts clearly show that it was
no tenancy relation between respondent Salenga not the Ombudsman through the OSP who allowed
and Rafael L. Lopez, and thus, the complaint was respondent Ilao, Jr. to submit his Counter-Affidavit. It
dismissible on its face. was the Sandiganbayan who granted the prayed for
re-investigation and ordered the OSP to conduct
ISSUE: Whether or not the petitioner has legal
the re investigation . The OSP simply followed the
standing to pursue the instant petition? Whether or
graft court’s directive to conduct the re-investigation
not the Ombudsman likewise erred in reversing his
after the Counter-Affidavit of respondent Ilao, Jr. was
own resolution where it was resolved that accused
filed. Indeed, petitioner did not contest nor question Facts: Petitioner Jaime Ong and Respondent
the August 29,1997 Order of the graft court. spouses Robles an “Agreement of Purchase and
Moreover, petitioner did not file any reply-affidavit in
Sale” (Nota Bene: Contract to Sell) with regards two
the re-investigation despite notice.
parcels of land with a rice mill and piggery situated at
The nature of the case is determined by the settled Quezon for P2M. As part of the terms and
rule that jurisdiction over the subject matter is conditions, petitioner shall advance downpayment of
determined by the allegations of the complaint. The 300K, shall pay the loan of the spouses of the bank,
nature of an action is determined by the material
and will pay the balance of the purchase price
averments in the complaint and the character of the
relief sought not by the defenses asserted in the quarterly.
answer or motion to dismiss. Respondent Salenga’s
complaint and its attachment clearly spells out the Petitioner was able to pay the downpayment and
jurisdictional allegations that he is an agricultural subsequently occupied the property. However, he
tenant in possession of the fishpond and is about to gave the spouses postdated checks which were
be ejected from it, clearly, respondent Ilao, Jr. could dishonored due to insufficient funds. To make it
not be faulted in assuming jurisdiction as said worse, he was not able to fully pay the loan of the
allegations characterize an agricultural dispute.
spouses in the bank.
Besides, whatever defense asserted in an answer or
motion to dismiss is not to be considered in resolving The bank threatened to foreclose the mortgage, so
the issue on jurisdiction as it cannot be made what the spouses did was to sell three of the
dependent upon the allegations of the defendant. transformers of the rice mill in order to satisfy the
loan obligation.
ONG VS COURT OF APPEALS
Respondents now want to rescind the contract on
account of Ong’s non-fulfillment of obligation and
seek to recover the property with damages.
RTC upheld the rescission and ordered mutual this instance, is not even a breach but merely an
restitution as well as awarded exemplary damages. event which prevents the vendor’s obligation to
The CA deleted the award of exemplary damages. convey title from acquiring binding force. Hence, the
agreement of the parties in the case at bench may
Issue: be set aside, but not because of a breach on the part
1. WON the respondent spouses may rescind the of petitioner for failure to complete payment of the
contract? YES, but rescind through 1191 and not purchase price. Rather, his failure to do so brought
1381. about a situation which prevented the obligation of
2. WON there was novation of obligation? NO. (But respondent spouses to convey title from acquiring an
we won’t tackle it here yet.) obligatory force.

Held: The Robles spouses bound themselves to 1191 vs. 1381


deliver a deed of absolute sale and clean title
covering the two parcels of land upon full payment Although both presuppose contracts validly entered
by the buyer of the purchase price of P2,000,000.00 into and subsisting and both require mutual
(since it is a contract to sell diba?) This promise to restitution when proper, they are not entirely
sell was subject to the fulfillment of the suspensive identical. Articles 1380 is a remedy granted by law to
condition of full payment of the purchase price by the the contracting parties and even to third persons, to
petitioner. Petitioner, however, failed to complete secure the reparation of damages caused to them by
payment of the purchase price. The non-fulfillment of a contract, even if this should be valid, by restoration
the condition of full payment rendered the contract to of things to their condition at the moment prior to the
sell ineffective and without force and effect. celebration of the contract. It implies a contract,
which even if initially valid, produces a lesion or a
It must be stressed that the breach contemplated in pecuniary damage to someone. Article 1191 of the
Article 1191 of the New Civil Code is the obligor’s New Civil Code refers to rescission applicable to
failure to comply with an obligation. Failure to pay, in reciprocal obligations. Rescission under Article 1191
is a principal action which is based on breach of a Relations Commission (NLRC). She alleges that she
party, while rescission under Article 1381 is a was underpaid and was jailed for three months in
subsidiary action limited to cases of rescissible Taiwan. She further alleges that the 2-
contracts. year extension of her employment contract was with
the consent and knowledge of Sunace. Sunace, on
the other hand, denied all the allegations.
SUNANCE INTERNATIONAL VS NLRC The Labor Arbiter ruled in favor of Montehermozo and
found Sunace liable thereof. The National Labor
FACTS: There is an implied revocation of an agency Relations Commission and Court of Appeals affirmed
relationship when after the termination of the the labor arbiter’s decision. Hence, the filing of this
original employment contract, the foreign principal appeal.
directly negotiated with the employee and entered into
a new and separate employment contract. ISSUE:
Whether or not the 2-year extension of
Respondent Divina Montehermozo is a domestic Montehermozo’s employment was made with the
helper deployed to Taiwan by Sunace knowledge and consent of Sunace
International Management Services (Sunace) under a
12-month contract. Such employment was made with HELD:
the assistance of Taiwanese broker Edmund Wang. Contrary to the Court of Appeals finding, the alleged
After the expiration of the contract, Montehermozo continuous communication was with the Taiwanese
continued her employment with her Taiwanese broker Wang, not with the foreign employer.
employer for another 2 years.
The finding of the Court of Appeals solely on the basis
When Montehermozo returned to the Philippines, she of the telefax message written by Wang to Sunace,
filed a complaint against Sunace, Wang, and her that Sunace continually communicated with the
Taiwanese employer before the National Labor foreign “principal” (sic) and therefore was aware of
and had consented to the execution of Respecting the decision of Court of Appeals following
the extension of the contract is misplaced. The as agent of its foreign principal, [Sunace] cannot
message does not provide evidence that Sunace was profess ignorance of such an extension as obviously,
privy to the new contract executed after the expiration the act of its
on February 1, 1998 of the original contract. That principal extending [Montehermozo’s] employment
Sunace and the Taiwanese broker communicated contract necessarily bound it, it too is a
regarding Montehermozo’s allegedly withheld savings misapplication, a misapplication of the theory of
does not necessarily mean that Sunace ratified imputed knowledge.
the extension of the contract.
The theory of imputed knowledge ascribes
As can be seen from that letter communication, it was the knowledge of the agent, Sunace, to the principal,
just an information given to Sunace that employer, not the other way around. The knowledge
Montehermozo had taken already her savings from of the principal-foreign employer cannot, therefore, be
her foreign employer and that no deduction was made imputed to its agent Sunace.
on her salary. It contains nothing about
the extension or Sunace’s consent thereto. There being no substantial proof that Sunace knew of
and consented to be bound under the 2-
Parenthetically, since the telefax message is dated year employment contract extension, it cannot be said
February 21, 2000, it is safe to assume that it was sent to be privy thereto. As such, it and its “owner” cannot
to enlighten Sunace who had been directed, by be held solidarily liable for any of Montehermozo’s
Summons issued on February 15, 2000, to appear on claims arising from the 2-year employment extension.
February 28, 2000 for a mandatory conference As the New Civil Code provides, Contracts take effect
following Montehermozo’s filing of the complaint on only between the parties, their assigns, and heirs,
February 14, 2000. except in case where the rights and obligations arising
from the contract are not transmissible by their nature,
or by stipulation or by provision of law.
Furthermore, as Sunace correctly points out, there office was opened, the same was run by the herein
was an implied revocation of its agency relationship appellant Una 0. Sevilla payable to Tourist World
Service Inc. by any airline for any fare brought in on
with its foreign principal when, after
the efforts of Mrs. Lina Sevilla, 4% was to go to Lina
the termination of the originalemployment contract,
Sevilla and 3% was to be withheld by the Tourist
the foreign principal directly negotiated with World Service, Inc.
Montehermozo and entered into a new and
separate employment contract in Taiwan. Article On November 24, 1961 the Tourist World Service,
1924 of the New Civil Code states that the agency is Inc. appears to have been informed that Lina Sevilla
revoked if the principal directly manages the was connected with a rival firm, the Philippine Travel
business entrusted to the agent, dealing directly with Bureau, and, since the branch office was anyhow
third persons. losing, the Tourist World Service considered closing
down its office.

On June 17,1963, appellant Lina Sevilla refiled her


SEVILLA VS CA case against the herein appellees and after the
Facts: The petitioners invoke the provisions on issues were joined, the reinstated counterclaim of
human relations of the Civil Code in this appeal by Segundina Noguera and the new complaint of
certiorari. Mrs. Segundina Noguera, party of the first appellant Lina Sevilla were jointly heard following
part; the Tourist World Service, Inc., represented by which the court ordered both cases dismiss for lack
Mr. Eliseo Canilao as party of the second part, and of merit.
hereinafter referred to as appellants, the Tourist
World Service, Inc. leased the premises belonging to In her appeal, Lina Sevilla claims that a joint
the party of the first part at Mabini St., Manila for the bussiness venture was entered into by and between
former-s use as a branch office. In the said contract her and appellee TWS with offices at the Ermita
the party of the third part held herself solidarily liable branch office and that she was not an employee of
with the party of the part for the prompt payment of the TWS to the end that her relationship with TWS
the monthly rental agreed on. When the branch was one of a joint business venture appellant made
declarations.
right of control test, "where the person for whom the
Issue: services are performed reserves a right to control not
only the end to be achieved but also the means to be
Whether or not the padlocking of the premises by the used in reaching such end." Subsequently, however,
Tourist World Service, Inc. without the knowledge we have considered, in addition to the standard of
and consent of the appellant Lina Sevilla entitled the right-of control, the existing economic conditions
latter to the relief of damages prayed for and whether prevailing between the parties, like the inclusion of
or not the evidence for the said appellant supports the employee in the payrolls, in determining the
the contention that the appellee Tourist World existence of an employer-employee relationship.
Service, Inc. unilaterally and without the consent of
the appellant disconnected the telephone lines of the the Decision promulgated on January 23, 1975 as
Ermita branch office of the appellee Tourist World well as the Resolution issued on July 31, 1975, by
Service, Inc.? the respondent Court of Appeals is hereby
REVERSED and SET ASIDE. The private
Held: respondent, Tourist World Service, Inc., and Eliseo
Canilao, are ORDERED jointly and severally to
The trial court held for the private respondent on the indemnify the petitioner, Lina Sevilla, the sum of
premise that the private respondent, Tourist World 25,00.00 as and for moral damages, the sum of
Service, Inc., being the true lessee, it was within its P10,000.00, as and for exemplary damages, and the
prerogative to terminate the lease and padlock the sum of P5,000.00, as and for nominal and/or
premises. It likewise found the petitioner, Lina temperate damages.
Sevilla, to be a mere employee of said Tourist World
Service, Inc. and as such, she was bound by the
acts of her employer. The respondent Court of HAHN VS COURT OF APPEALS
Appeal rendered an affirmance.
Facts:
In this jurisdiction, there has been no uniform test to 1.Alfred Hahn is a Filipino citizen
determine the evidence of an employer-employee doing business under the name and style "Hahn-
relation. In general, we have relied on the so-called Manila."
2.Bayerische Motoren Werke Aktiengesellschaft (BM 7.BMW, however, went on to terminate its dealership
W) is a nonresident foreign corporation existing with Hahn.
under the laws of the former Federal Republic of 8.Hahn filed a complaint for
Germany, with principal office at Munich, Germany. specific performance and damages in the RTC. RTC
3.In 1963, Hahn executed in favor of BMW a Deed of issued a writ preliminary injunction.
Assignment with Special Power of Attorney which 9.BMW appealed to the CA. CA reversed on the
essentially, makes Hahn as the exclusive dealer ground that Hahn is not an agent of BMW and that
of BMW in the Philippines. Moreover, it stated there BMW is “not doing business in the Phils.” By virtue of
that Hahn and BMW “shall continue business the latter, the writ of preliminary injunction should not
relations as has been usual in the past without a have been issued since RTC did not have jurisdiction
formal contract." over it.
4.In 1993, BMW and Columbia Motors Corp (CMC)
had a meeting which would grant CMC exclusive Issue
dealership of BMW cars.
5.Hahn was informed later that BMW was W/N Hahn is agent or a distributor (or broker) in the
dissatisfied with how it carrying its business. Philippines of BMW.
However, BMW expressed willingness to continue HELD:
business relations with the petitioner on the basis of
a "standard BMW importer" contract, otherwise, it There is nothing to support the appellate
said, if this was not acceptable to petitioner, BMW court's finding that Hahn solicited orders alone and
would have no alternative but to terminate for his own account and without "interference from,
petitioner's exclusive dealership effective June 30, let alone direction of, BMW. To the contrary, Hahn
1993. claimed he took orders for BMW cars
6.Hahn protested alleging that such termination is a and transmitted them to BMW.
breach of the Deed of Assignment. Hahn insisted
that as long as the assignment of its trademark and Upon receipt of the orders, BMW fixed the down
device subsisted, he remained BMW's exclusive payment and pricing charges, notified Hahn of the
dealer in the Philippines because the assignment scheduled production month for the orders, and
was made inconsideration of the exclusive reconfirmed the orders by signing and returning to
dealership. Hahn the acceptance sheets. Payment was made by
the buyer directly to BMW. Title to cars purchased government office or agency due to complainant and
passed directly to the buyer and Hahn never paid for his co-heirs by reason of their application for
the purchase price of BMW cars sold in the Homestead Patent. Complainant refused to sign the
Philippines. Hahn was credited with a commission SPA as he wanted to obtain the documents
equal to 14% of the purchase price upon the personally. The respondent argues that the
invoicing of a vehicle order by BMW. allegations of complainant are purely hearsay. He
stresses that complaint was instituted to harass him
Upon confirmation in writing that the vehicles had
because he was the counsel of an opposing litigant
been registered in the Philippines and serviced by
against complainant’s corporation in an ejectment
him, Hahn received an additional 3% of the full
case entitled “General Milling Corporation v.
purchase price. Hahn performed after-sale services,
including, warranty services, for which he received Cebu Autometic Motors, Inc. and Tirso Uytengsu III.
reimbursement from BMW. All orders were on Complainant charges that respondent committed an
invoices and forms of BMW. act meriting disbarment when the latter caused to
have a special power of attorney, which the former
reused to sign earlier, executed by Mrs. Connie
UYTENGU VS BADUEL Kokseng, former guardian of complainant and his co-
heirs, authorizing certain individuals to secure the
release from the Register of Deeds and other
FACTS: Complainant is one of the heirs of Tirso government offices in General Santos City, titles and
Uytengsu, Jr. He and his co-heirs had a pending other documents pertaining to complainant’s and his
patent application. He alleges that sometime in co-heirs’ homestead application.
December 1998 respondent requested him to sign a
ISSUE: Whether or not the respondent has the
special power of attorney (SPA) authorizing Luis
authority to represent the complainant in
Wee (Wee) and/or Thomas Jacobo (Jacobo) to
their homestead patent application.
claim, demand, acknowledge and receive on his
behalf the certificates of title from the Register of HELD: The relation of attorney and client is in many
Deeds, General Santos City, Department of respects one of agency and the general rules of
Environment and Natural Resources and from any ordinary agency apply to such relation. The extent of
authority of a lawyer, when acting on behalf of his certification. Consequently, a petition was filed before
client outside of court, is measured by the same test the Court of Appeals.
as that which is applied to an ordinary agent. Such
being the case, even respondent himself can acquire While the case was pending in the Supreme Court,
the certificates of title and other documents without the respondent entered into a compromise agreement
need of an SPA from complainant and his co-heirs. and signed Quitclaims and Release. The same has
been subscribed and sworn to before the Labor
In addition, the Court agrees with the investigating
Arbiter. Accordingly, the case was dismissed.
commissioner that the allegations of complainant
constitutes mere hearsay evidence and may not be ISSUES: Whether or not the compromise agreement
admissible in any proceeding. It was proven that the entered into by the respondent, without his counsel, is
case at bar is without merit and that evidences are valid
weak and proved to be just hearsay
HELD: A compromise agreement is valid as long as
the consideration is reasonable and the employee
J-PHIL MARINE VS NLRC signed the waiver voluntarily, with a full understanding
of what he was entering into.
FACTS: Worked as a cook on aboard vessels plying
overseas, Warlito E. Dumalaog was employed as a A compromise agreement is valid as long as the
cook on board vessels plying overseas. He filed a pro- consideration is reasonable and the employee signed
forma complaint on March 4,2002 before the National the waiver voluntarily, with a full understanding of
Labor Relations Commission (NLRC) against J-Phil what he was entering into. All that is required for the
Marine, Inc., its then president Jesus Candava, and compromise to be deemed voluntarily entered into is
its foreign principal Norman Shipping Services. personal and specific individual consent. Thus,
contrary to Dumalaoag's contention, the employee's
The Labor Arbiter dismissed the complaint for lack of counsel need not be present at the time of the signing
merit. On appeal, the NLRC reversed the decision of of the compromise agreement.
the Labor Arbiter. The Court of Appeals affirmed the
dismissal for failure to attach to the petition all material The relation of attorney and client is in many respects
documents and for defective verification and one of agency, and the general rules of agency apply
to such relation. The acts of an agent are deemed the
acts of the principal only if the agent acts within the not revoked since Ybañez requested that Lim stop
scope of his authority. The circumstances of this case payment of the checks payable to Saban only after
indicate that Dumalaoag's counsel is acting beyond the consummation of the sale. At that time, Saban
the scope of his authority in questioning the had already performed his obligation as agent when
compromise agreement. the Deed of Absolute Sale was executed. To deprive
Saban of his commission subsequent to the sale
which was consummated through his efforts would
be a breach of his contract of agency.
LIM VS SABAN
The logical conclusion of Court is that Lim changed
Facts: Ybñez, owner of a lot entered into an Agency her mind in agreeing to purchase the lot at 600k after
agreement with Saban authorizing the latter to look talking to Ybañez and realizing that Saban’s
for a buyer of the Lot, with 200k as selling price commission was higher than the share of the owner.
which he can mark up to cover commission and It was sufficient to conclude Ybañez and Lim
transfer expenses. Saban sold the lot to Lim in the connived to deprive Saban of his commission by
amount of 600k. Lim issued four checks to Saban dealing with each other directly and reducing the
but Ybañez asked Lim to cancel said checks and pay price and leaving nothing to compensate Saban for
the remaining amount directly to Ybañez. Saban filed his effort.
a case against Ybañez and Lim. Pending case,
Ybañez died without being substituted. RTC
dismissed Saban’s complaint, the four checks issued VELOSO VS COURT OF APPEALS
by Lim were stale and non-negotiable and the Latter
was absolved. CA reversed the decision.
Applicable Provision: Art. 1878
ISSUE:
Whether or not as agent, Saban is entitled to receive Facts: Petitioner Francisco Veloso was the sole
his commission and Lim should pay the same. owner of a registered parcel of land in Tondo,
Manila, which he acquired in 1957. His wife Irma,
RULING: armed with a general power of attorney, sold said lot
The court affirms the CA’s finding that agency was to the respondent spouses Escario in 1987.
Petitioner filed an action for annulment of the deed of
sale and reconveyance of property
Issue: Whether a general power of attorney may
authorize an agent to sell real property.
Held/Ratio: Yes. Although sale of real property
requires a special power of attorney, if a general
power of attorney expressly grants the power to sell
to the agent, there is no need to execute a separate
special power of attorney. The assailed power of
attorney had the following provision: “To buy or sell
land, more specifically TCT No. 49138” Thus, said
power of attorney sufficiently authorized the wife to
sell the property. Therefore, the sale is valid