Civil Law Review 2 | Atty.

Legarda 1
Case Digest 2018 - PARTNERSHIP

ROSARIO U. YULO, assisted by her husband JOSE C. YULO vs.YANG On October 27, 1950, Mrs. Yulo demanded from Yang Chiao Seng her share
CHIAO SENG, G.R. No. L-12541, August 28, 1959, LABRADOR, J. in the profits of the business.

The following are the requisites of partnership: (1) two or more persons who
bind themselves to contribute money, property, or industry to a common fund;
(2) intention on the part of the partners to divide the profits among
themselves. (Art. 1767, Civil Code.).
Facts:
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 yet expired; (3) that Mrs. Yulo is
authorized personally to conduct such business in the lobby 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 December 31, 1947, all improvements placed by the
partnership shall belong to Mrs. Yulo, but if the partnership agreement is
terminated before the lapse of one and a half years period under any of the
causes mentioned in paragraph (2), then Yang Chiao Seng shall have the
right to remove and take away all improvements that the partnership may
place in the premises.
In view of the refusal of Yang to pay her the amount agreed upon, Mrs. Yulo
instituted this action on May 26, 1954, alleging the existence of a
partnership between them and that the defendant Yang Chiao Seng has
refused to pay her share from December, 1949 to December, 1950; that
after December 31, 1950 the partnership between Mrs. Yulo and Yang
terminated, as a result of which, plaintiff became the absolute owner of the
building occupied by the Cine Astor; that the reasonable rental that the
defendant should pay therefor from January, 1951 is 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, 1950, and that as a result of such bad faith and
malice on the part of the defendant, Mrs. Yulo has suffered damages in the
amount of P160,000 and exemplary damages to the extent of P5,000. The
prayer includes a demand for the payment of the above sums plus the sum
of P10,000 for the attorney's fees.
In answer to the complaint, defendant alleges that the real agreement
between the plaintiff and the defendant was one of lease and not of
partnership; that the partnership was adopted as a subterfuge to get around
the prohibition contained in the contract of lease between the owners and
the plaintiff against the sublease of the said property. As to the other claims,
he denies the same and alleges that the fair rental value of the land is only
P1,100. By way of counterclaim he alleges that by reason of an attachment
issued against the properties of the defendant the latter has suffered
damages amounting to P100,000.
Issue:
Whether or not the agreement is a partnership

Pursuant to the above offer, which plaintiff evidently accepted, the parties
Ruling:
executed a partnership agreement establishing the "Yang & Company,
Limited," which was to exist from July 1, 1945 to December 31, 1947. It
states that it will conduct and carry on the business of operating a theatre No.
for the exhibition of motion and talking pictures. The capital is fixed at
P100,000, P80,000 of which is to be furnished by Yang Chiao Seng and
We have gone over the evidence and we fully agree with the conclusion of
P20,000, by Mrs. Yulo. All gains and profits are to be distributed among the
the trial court that the agreement was a sublease, not a partnership. The
partners in the same proportion as their capital contribution and the
following are the requisites of partnership: (1) two or more persons who
liability of Mrs. Yulo, in case of loss, shall be limited to her capital
bind themselves to contribute money, property, or industry to a common
contribution.
fund; (2) intention on the part of the partners to divide the profits among
themselves. (Art. 1767, Civil Code.).
In June , 1946, they executed a supplementary agreement, extending the
partnership for a period of three years beginning January 1, 1948 to
In the first place, plaintiff did not furnish the supposed P20,000 capital. In
December 31, 1950. The benefits are to be divided between them at the rate
the second place, she did not furnish any help or intervention in the
of 50-50 and after December 31, 1950, the showhouse building shall belong
management of the theatre. In the third place, it does not appear that she
exclusively to the second party, Mrs. Yulo.
has ever demanded from defendant any accounting of the expenses and
earnings of the business. Were she really a partner, her first concern should
The land on which the theatre was constructed was leased by plaintiff Mrs. have been to find out how the business was progressing, whether the
Yulo from Emilia Carrion Santa Marina and Maria Carrion Santa Marina. In expenses were legitimate, whether the earnings were correct, etc. She was
the contract of lease it was stipulated that the lease shall continue for an absolutely silent with respect to any of the acts that a partner should have
indefinite period of time, but that after one year the lease may be cancelled done; all that she did was to receive her share of P3,000 a month, which can
by either party by written notice to the other party at least 90 days before not be interpreted in any manner than a payment for the use of the
the date of cancellation. The last contract was executed between the owners premises which she had leased from the owners. Clearly, plaintiff had
and Mrs. Yulo on April 5, 1948. But on April 12, 1949, the attorney for the always acted in accordance with the original letter of defendant of June 17,
owners notified Mrs. Yulo of the owner's desire to cancel the contract of 1945 (Exh. "A"), which shows that both parties considered this offer as the
lease on July 31, 1949. In view of the above notice, Mrs. Yulo and her real contract between them.
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
Plaintiff claims the sum of P41,000 as representing her share or
Municipal Court of Manila rendered judgment ordering the ejectment of
participation in the business from December, 1949. But the original letter of
Mrs. Yulo and Mr. Yang. The judgment was appealed. In the Court of First
the defendant, Exh. "A", expressly states that the agreement between the
Instance, the two cases were afterwards heard jointly, and judgment was
plaintiff and the defendant was to end upon the termination of the right of
rendered dismissing the complaint of Mrs. Yulo and her husband, and
the plaintiff to the lease. Plaintiff's right having terminated in July, 1949 as
declaring the contract of lease of the premises terminated as of July 31,
found by the Court of Appeals, the partnership agreement or the agreement
1949, and fixing the reasonable monthly rentals of said premises at P100.
for her to receive a participation of P3,000 automatically ceased as of said
Both parties appealed from said decision and the Court of Appeals, on April
date.
30, 1955, affirmed the judgment.

HEIRS OF JOSE LIM, represented by ELENITO LIM vs. JULIET VILLA
LIM, G.R. No. 172690, March 3, 2010, NACHURA, J.
A partnership exists when two or more persons agree to place their money,
effects, labor, and skill in lawful commerce or business, with the
understanding that there shall be a proportionate sharing of the profits and
losses among them. A contract of partnership is defined by the Civil Code as
one where 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.
Facts:
Petitioners are the heirs of the late Jose Lim (Jose), namely: Jose's widow
Cresencia Palad (Cresencia); and their children Elenito, Evelia, Imelda,
Edelyna and Edison, all surnamed Lim (petitioners), represented by Elenito
Lim (Elenito). They filed a Complaint for Partition, Accounting and
Damages against respondent Juliet Villa Lim (respondent), widow of the
late Elfledo Lim (Elfledo), who was the eldest son of Jose and Cresencia.
Petitioners alleged that Jose was the liaison officer of Interwood Sawmill in
Cagsiay, Mauban, Quezon. Sometime in 1980, Jose, together with his friends
Jimmy Yu (Jimmy) and Norberto Uy (Norberto), formed a partnership to
engage in the trucking business. Initially, with a contribution of ₱50,000.00
each, they purchased a truck to be used in the hauling and transport of
lumber of the sawmill. Jose managed the operations of this trucking
business until his death on August 15, 1981. Thereafter, Jose's heirs,
including Elfledo, and partners agreed to continue the business under the
management of Elfledo. The shares in the partnership profits and income
that formed part of the estate of Jose were held in trust by Elfledo, with
petitioners' authority for Elfledo to use, purchase or acquire properties
using said funds.
Petitioners also alleged that, at that time, Elfledo was a fresh commerce
graduate serving as his father’s driver in the trucking business. He was
never a partner or an investor in the business and merely supervised the
purchase of additional trucks using the income from the trucking business
of the partners. By the time the partnership ceased, it had nine trucks,
which were all registered in Elfledo's name. Petitioners asseverated that it
was also through Elfledo’s management of the partnership that he was able
to purchase numerous real properties by using the profits derived
therefrom, all of which were registered in his name and that of respondent.
In addition to the nine trucks, Elfledo also acquired five other motor
vehicles.
On May 18, 1995, Elfledo died, leaving respondent as his sole surviving heir.
Petitioners claimed that respondent took over the administration of the
aforementioned properties, which belonged to the estate of Jose, without
their consent and approval. Claiming that they are co-owners of the
properties, petitioners required respondent to submit an accounting of all
income, profits and rentals received from the estate of Elfledo, and to
surrender the administration thereof. Respondent refused; thus, the filing of
this case.
Respondent traversed petitioners' allegations and claimed that Elfledo was
himself a partner of Norberto and Jimmy. Respondent also claimed that per
testimony of Cresencia, sometime in 1980, Jose gave Elfledo ₱50,000.00 as
the latter's capital in an informal partnership with Jimmy and Norberto.
When Elfledo and respondent got married in 1981, the partnership only had
one truck; but through the efforts of Elfledo, the business flourished. Other
than this trucking business, Elfledo, together with respondent, engaged in
other business ventures. Thus, they were able to buy real properties and to
put up their own car assembly and repair business. When Norberto was
ambushed and killed on July 16, 1993, the trucking business started to
falter. When Elfledo died on May 18, 1995 due to a heart attack, respondent
talked to Jimmy and to the heirs of Norberto, as she could no longer run the
business. Jimmy suggested that three out of the nine trucks be given to him
as his share, while the other three trucks be given to the heirs of Norberto.
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Case Digest 2018 - PARTNERSHIP
However, Norberto's wife, Paquita Uy, was not interested in the vehicles.
Thus, she sold the same to respondent, who paid for them in installments.
Respondent also alleged that when Jose died in 1981, he left no known
assets, and the partnership with Jimmy and Norberto ceased upon his
demise. Respondent also stressed that Jose left no properties that Elfledo
could have held in trust. Respondent maintained that all the properties
involved in this case were purchased and acquired through her and her
husband’s joint efforts and hard work, and without any participation or
contribution from petitioners or from Jose. Respondent submitted that
these are conjugal partnership properties; and thus, she had the right to
refuse to render an accounting for the income or profits of their own
business.
Issue:
Who between Jose and Elfledo was the "partner" in the trucking business.
Ruling:
Elfredo.
A partnership exists when two or more persons agree to place their money,
effects, labor, and skill in lawful commerce or business, with the
understanding that there shall be a proportionate sharing of the profits and
losses among them. A contract of partnership is defined by the Civil Code as
one where 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.
Undoubtedly, the best evidence would have been the contract of
partnership or the articles of partnership. Unfortunately, there is none in
this case, because the alleged partnership was never formally organized.
Nonetheless, we are asked to determine who between Jose and Elfledo was
the "partner" in the trucking business.
The evidence presented by petitioners falls short of the quantum of proof
required to establish that: (1) Jose was the partner and not Elfledo; and (2)
all the properties acquired by Elfledo and respondent form part of the
estate of Jose, having been derived from the alleged partnership.
Art. 1769. In determining whether a partnership exists, these rules shall
apply:
(1) Except as provided by Article 1825, persons who are not
partners as to each other are not partners as to third persons;
(2) Co-ownership or co-possession does not of itself establish a
partnership, whether such co-owners or co-possessors do or do
not share any profits made by the use of the property;
(3) The sharing of gross returns does not of itself establish a
partnership, whether or not the persons sharing them have a
joint or common right or interest in any property from which the
returns are derived;
(4) The receipt by a person of a share of the profits of a business
is a prima facie evidence that he is a partner in the business, but
no such inference shall be drawn if such profits were received in
payment:
(a) As a debt by installments or otherwise;
(b) As wages of an employee or rent to a landlord;
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Case Digest 2018 - PARTNERSHIP

(c) As an annuity to a widow or representative of a

deceased partner;

(d) As interest on a loan, though the amount of

payment vary with the profits of the business;

(e) As the consideration for the sale of a goodwill of a

business or other property by installments or
otherwise.

Applying the legal provision to the facts of this case, the following
circumstances tend to prove that Elfledo was himself the partner of Jimmy
and Norberto: 1) Cresencia testified that Jose gave Elfledo ₱50,000.00, as
share in the partnership, on a date that coincided with the payment of the
initial capital in the partnership; (2) Elfledo ran the affairs of the
partnership, wielding absolute control, power and authority, without any
intervention or opposition whatsoever from any of petitioners herein; (3)
all of the properties, particularly the nine trucks of the partnership, were
registered in the name of Elfledo; (4) Jimmy testified that Elfledo did not
receive wages or salaries from the partnership, indicating that what he
actually received were shares of the profits of the business; and (5) none of
the petitioners, as heirs of Jose, the alleged partner, demanded periodic
accounting from Elfledo during his lifetime. As repeatedly stressed in Heirs
of Tan Eng Kee, a demand for periodic accounting is evidence of a
partnership.

Furthermore, petitioners failed to adduce any evidence to show that the

real and personal properties acquired and registered in the names of
Elfledo and respondent formed part of the estate of Jose, having been
derived from Jose's alleged partnership with Jimmy and Norberto. They
failed to refute respondent's claim that Elfledo and respondent engaged in
other businesses. Edison even admitted that Elfledo also sold Interwood
lumber as a sideline. Petitioners could not offer any credible evidence other
than their bare assertions. Thus, we apply the basic rule of evidence that
between documentary and oral evidence, the former carries more weight.

Finally, we agree with the judicious findings of the CA, to wit:

The above testimonies prove that Elfledo was not just a hired help but one
of the partners in the trucking business, active and visible in the running of
its affairs from day one until this ceased operations upon his demise. The
extent of his control, administration and management of the partnership
and its business, the fact that its properties were placed in his name, and
that he was not paid salary or other compensation by the partners, are
indicative of the fact that Elfledo was a partner and a controlling one at that.
It is apparent that the other partners only contributed in the initial capital
but had no say thereafter on how the business was ran. Evidently it was
through Elfredo’s efforts and hard work that the partnership was able to
acquire more trucks and otherwise prosper. Even the appellant participated
in the affairs of the partnership by acting as the bookkeeper sans
salary.1avvphi1

It is notable too that Jose Lim died when the partnership was barely a year
old, and the partnership and its business not only continued but also
flourished. If it were true that it was Jose Lim and not Elfledo who was the
partner, then upon his death the partnership should have

been dissolved and its assets liquidated. On the contrary, these were not
done but instead its operation continued under the helm of Elfledo and
without any participation from the heirs of Jose Lim.

Whatever properties appellant and her husband had acquired, this was
through their own concerted efforts and hard work. Elfledo did not limit
himself to the business of their partnership but engaged in other lines of
businesses as well.

J. TIOSEJO INVESTMENT CORP. v. SPOUSES BENJAMIN AND ELEANOR
ANG, G.R. No. 174149 : September 8, 2010, PEREZ, J.
As correctly argued by the latter, moreover, a joint venture is considered in
this jurisdiction as a form of partnership and is, accordingly, governed by the
law of partnerships. 
Facts:
On 28 December 1995 petitioner entered into a Joint Venture
Agreement (JVA) with Primetown Property Group, Inc. (PPGI) for the
development of a residential condominium project to be known as The
Meditel on the former’s 9,502 square meter property along Samat St.,
Highway Hills, Mandaluyong City. With petitioner contributing the same
property to the joint venture and PPGI undertaking to develop the
condominium, the JVA provided, among other terms and conditions, that
the developed units shall be shared by the former and the latter at a ratio of
17%-83%, respectively. While both parties were allowed, at their own
individual responsibility, to pre-sell the units pertaining to them, PPGI
further undertook to use all proceeds from the pre-selling of its saleable
units for the completion of the Condominium Project.” 
By virtue of a License to Sell, PPGI executed Contract to Sell No. 0212 with
Spouses Benjamin and Eleanor Ang on 5 February 1997, over the
condominium unit denominated as Unit A-1006, for the agreed contract
price of  P52,597.88  per square meter or a total P2,077,334.25. On the
same date PPGI and respondents also executed Contract to Sell over the
parking space identified as Parking Slot No. 0405, for the stipulated
consideration of P26,400.00 square meters or a total of P313,500.00.
On 21 July 1999, respondents filed against petitioner and PPGI the
complaint for the rescission of the aforesaid Contracts to Sell. Contending
that they were assured by petitioner and PPGI that the subject
condominium unit and parking space would be available for turn-over and
occupancy in December 1998, respondents averred, among other matters,
that in view of the non-completion of the project according to said
representation, respondents instructed petitioner and PPGI to stop
depositing the post-dated checks they issued and to cancel said Contracts to
Sell;  and, that despite several demands, petitioner and PPGI have failed and
refused to refund the P611,519.52 they already paid under the
circumstances.  rescinded upon written notice to the Developer and the latter shall hold the
Specifically denying the material allegations of the foregoing complaint,
PPGI filed its 7 September 1999 answer alleging that the delay in the
completion of the project was attributable to the economic crisis which
affected the country at the time; that the unexpected and unforeseen
inflation as well as increase in interest rates and cost of building materials
constitute force majeureand were beyond its control; that aware of its
responsibilities, it offered several alternatives to its buyers like respondents
for a transfer of their investment to its other feasible projects and for the
amounts they already paid to be considered as partial payment for the
replacement unit/s; and, that the complaint was prematurely filed in view
of the on-going negotiations it is undertaking with its buyers and
prospective joint venture partners.  Aside from the dismissal of the
complaint, PPGI sought the readjustment of the contract price and the grant
of its counterclaims for attorney’s fees and litigation expenses.  Developer in connection with the development of the first phase.”
Calling attention to the fact that its prestation under the JVA consisted in
contributing the property on which The Meditel was to be constructed,
petitioner asseverated that, by the terms of the JVA, each party was
individually responsible for the marketing and sale of the units pertaining
to its share; that not being privy to the Contracts to Sell executed by PPGI
and respondents, it did not receive any portion of the payments made by
the latter; and, that without any contributory fault and negligence on its
part, PPGI breached its undertakings under the JVA by failing to complete
the condominium project.  In addition to the dismissal of the complaint and
the grant of its counterclaims for exemplary damages, attorney’s fees,
litigation expenses and the costs, petitioner interposed a cross-claim
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Case Digest 2018 - PARTNERSHIP
against PPGI for full reimbursement of any sum it may be adjudged liable to
pay respondents.
Issue:
Whether or not a joint venture is considered a partnership
Ruling:
Yes.
The HLURB Arbiter and Board correctly held petitioner liable alongside
PPGI for respondents’ claims and the P10,000.00 administrative fine
imposed pursuant to Section 20 in relation to Section 38 of P.D. 957.   By the
express terms of the JVA, it appears that petitioner not only retained
ownership of the property pending completion of the condominium project
but had also bound itself to answer liabilities proceeding from contracts
entered into by PPGI with third parties.  Article VIII, Section 1 of the JVA
distinctly provides as follows:
“Sec. 1. Rescission and damages. Non-performance by either party of its
obligations under this Agreement shall be excused when the same is due to
Force Majeure.  In such cases, the defaulting party must exercise due
diligence to minimize the breach and to remedy the same at the soonest
possible time.  In the event that either party defaults or breaches any of the
provisions of this Agreement other than by reason of Force Majeure, the
other party shall have the right to terminate this Agreement by giving
notice to the defaulting party, without prejudice to the filing of a civil case
for damages arising from the breach of the defaulting party.
In the event that the Developer shall be rendered unable to complete the
Condominium Project, and such failure is directly and solely attributable to
the Developer, the Owner shall send written notice to the Developer to
cause the completion of the Condominium Project.  If the developer fails to
comply within One Hundred Eighty (180) days from such notice or, within
such time, indicates its incapacity to complete the Project, the Owner shall
have the right to take over the construction and cause the completion
thereof.  If the Owner exercises its right to complete the Condominium
Project under these circumstances, this Agreement shall be automatically
former free and harmless from any and all liabilities to third persons arising
from such rescission.  In any case, the Owner shall respect and strictly
comply with any covenant entered into by the Developer and third parties
with respect to any of its units in the Condominium Project.   To enable the
owner to comply with this contingent liability, the Developer shall furnish
the Owner with a copy of its contracts with the said buyers on a month-to-
month basis.  Finally, in case the Owner would be constrained to assume the
obligations of the Developer to its own buyers, the Developer shall lose its
right to ask for indemnity for whatever it may have spent in the
Development of the Project.
Nevertheless, with respect to the buyers of the Developer for the First
Phase, the area intended for the Second Phase shall not be bound and/or
subjected to the said covenants and/or any other liability incurred by the
(Underscoring supplied)
Viewed in the light of the foregoing provision of the JVA, petitioner cannot
avoid liability by claiming that it was not in any way privy to the Contracts
to Sell executed by PPGI and respondents.  As correctly argued by the latter,
moreover, a joint venture is considered in this jurisdiction as a form of
partnership and is, accordingly, governed by the law of partnerships. Under
Article 1824 of the Civil Code of the Philippines, all partners are solidarily
liable with the partnership for everything chargeable to the partnership,
including loss or injury caused to a third person or penalties incurred due to
any wrongful act or omission of any partner acting in the ordinary course of
the business of the partnership or with the authority of his co-partners.
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Whether innocent or guilty, all the partners are solidarily liable with the
partnership itself.
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Case Digest 2018 - PARTNERSHIP

JOSEFINA P. REALUBIT vs. PROSENCIO D. JASO and EDEN G. JASO, G.R. Yes.

No.178782, September 21, 2011, PEREZ, J.
Generally understood to mean an organization formed for some temporary
purpose, a joint venture is likened to a particular partnership or one which
"has for its object determinate things, their use or fruits, or a specific
undertaking, or the exercise of a profession or vocation." The rule is settled
that joint ventures are governed by the law on partnershipswhich are, in turn,
based on mutual agency or delectus personae. 
Facts:
On 17 March 1994, petitioner Josefina Realubit (Josefina) entered into a
Joint Venture Agreement with Francis Eric Amaury Biondo (Biondo), a
French national, for the operation of an ice manufacturing business. With
Josefina as the industrial partner and Biondo as the capitalist partner, the
parties agreed that they would each receive 40% of the net profit, with the
remaining 20% to be used for the payment of the ice making machine which
was purchased for the business. For and in consideration of the sum of
₱500,000.00, however, Biondo subsequently executed a Deed of
Assignment dated 27 June 1997, transferring all his rights and interests in
the business in favor of respondent Eden Jaso (Eden), the wife of
respondent Prosencio Jaso. With Biondo’s eventual departure from the
country, the Spouses Jaso caused their lawyer to send Josefina a letter dated
19 February 1998, apprising her of their acquisition of said Frenchman’s
share in the business and formally demanding an accounting and inventory
thereof as well as the remittance of their portion of its profits.
We find the petition bereft of merit.
Generally understood to mean an organization formed for some temporary
purpose, a joint venture is likened to a particular partnership or one which
"has for its object determinate things, their use or fruits, or a specific
undertaking, or the exercise of a profession or vocation." The rule is settled
that joint ventures are governed by the law on partnerships which are, in
turn, based on mutual agency or delectus personae. Insofar as a partner’s
conveyance of the entirety of his interest in the partnership is concerned,
Article 1813 of the Civil Code provides as follows:
Art. 1813. A conveyance by a partner of his whole interest in the
partnership does not itself dissolve the partnership, or, as against the other
partners in the absence of agreement, entitle the assignee, during the
continuance of the partnership, to interfere in the management or
administration of the partnership business or affairs, or to require any
information or account of partnership transactions, or to inspect the
partnership books; but it merely entitles the assignee to receive in
accordance with his contracts the profits to which the assigning partners
would otherwise be entitled. However, in case of fraud in the management
of the partnership, the assignee may avail himself of the usual remedies.
In the case of a dissolution of the partnership, the assignee is entitled to
receive his assignor’s interest and may require an account from the date
only of the last account agreed to by all the partners.

Faulting Josefina with unjustified failure to heed their demand, the Spouses
From the foregoing provision, it is evident that "(t)he transfer by a partner
Jaso commenced the instant suit with the filing of their 3 August 1998
of his partnership interest does not make the assignee of such interest a
Complaint against Josefina, her husband, Ike Realubit (Ike), and their
partner of the firm, nor entitle the assignee to interfere in the management
alleged dummies, for specific performance, accounting, examination, audit
of the partnership business or to receive anything except the assignee’s
and inventory of assets and properties, dissolution of the joint venture,
profits. The assignment does not purport to transfer an interest in the
appointment of a receiver and damages. Said complaint alleged, among
partnership, but only a future contingent right to a portion of the ultimate
other matters, that the Spouses Realubit had no gainful occupation or
residue as the assignor may become entitled to receive by virtue of his
business prior to their joint venture with Biondo; that with the income of
proportionate interest in the capital." Since a partner’s interest in the
the business which earned not less than ₱3,000.00 per day, they were,
partnership includes his share in the profits, we find that the CA committed
however, able to acquire the two-storey building as well as the land on
no reversible error in ruling that the Spouses Jaso are entitled to Biondo’s
which the joint venture’s ice plant stands, another building which they used
share in the profits, despite Juanita’s lack of consent to the assignment of
as their office and/or residence and six (6) delivery vans; and, that aside
said Frenchman’s interest in the joint venture. Although Eden did not,
from appropriating for themselves the income of the business, the Spouses
moreover, become a partner as a consequence of the assignment and/or
Realubit have fraudulently concealed the funds and assets thereof thru their
acquire the right to require an accounting of the partnership business, the
relatives, associates or dummies.
CA correctly granted her prayer for dissolution of the joint venture
conformably with the right granted to the purchaser of a partner’s interest
Spouses Realubit filed their Answer dated 21 October 1998, specifically under Article 1831 of the Civil Code. 1âwphi1
denying the material allegations of the foregoing complaint. Claiming that
they have been engaged in the tube ice trading business under a single
Considering that they involve questions of fact, neither are we inclined to
proprietorship even before their dealings with Biondo, the Spouses
hospitably entertain the Spouses Realubit’s insistence on the supposed fact
Realubit, in turn, averred that their said business partner had left the
that Josefina’s joint venture with Biondo had already been dissolved and
country in May 1997 and could not have executed the Deed of Assignment
that the ice manufacturing business at 66-C Cenacle Drive, Sanville
which bears a signature markedly different from that which he affixed on
Subdivision, Project 6, Quezon City was merely a continuation of the same
their Joint Venture Agreement; that they refused the Spouses Jaso’s demand
business they previously operated under a single proprietorship. It is well-
in view of the dubious circumstances surrounding their acquisition of
entrenched doctrine that questions of fact are not proper subjects of appeal
Biondo’s share in the business which was established at Don Antonio
by certiorari under Rule 45 of the Rules of Court as this mode of appeal is
Heights, Commonwealth Avenue, Quezon City; that said business had
confined to questions of law. Upon the principle that this Court is not a trier
already stopped operations on 13 January 1996 when its plant shut down
of facts, we are not duty bound to examine the evidence introduced by the
after its power supply was disconnected by MERALCO for non-payment of
parties below to determine if the trial and the appellate courts correctly
utility bills; and, that it was their own tube ice trading business which had
assessed and evaluated the evidence on record. Absent showing that the
been moved to 66-C Cenacle Drive, Sanville Subdivision, Project 6, Quezon
factual findings complained of are devoid of support by the evidence on
City that the Spouses Jaso mistook for the ice manufacturing business
record or the assailed judgment is based on misapprehension of facts, the
established in partnership with Biondo.
Court will limit itself to reviewing only errors of law.

Issue:

Whether or not a joint venture is a partneship

Ruling:
 Civil Law Review 2 | Atty. Legarda 7
Case Digest 2018 - PARTNERSHIP

ISLAND SALES, INC. vs. UNITED PIONEERS GENERAL CONSTRUCTION
COMPANY, ET. AL defendants. BENJAMIN C. DACO, G.R. No. L-22493,
July 31, 1975, CONCEPCION JR., J.
Art. 1816. All partners including industrial ones, shall be liable pro rata with
all their property and after all the partnership assets have been exhausted, for
the contracts which may be entered into in the name and for the account of
the partnership, under its signature and by a person authorized to act for the
partnership. However, any partner may enter into a separate obligation to
perform a partnership contract.
Facts:
However, any partner may enter into a separate
obligation to perform a partnership contract.
In the instant case, there were five (5) general partners when the
promissory note in question was executed for and in behalf of the
partnership. Since the liability of the partners is pro rata, the liability of the
appellant Benjamin C. Daco shall be limited to only one-fifth ( 1/5 ) of the
obligations of the defendant company. The fact that the complaint against
the defendant Romulo B. Lumauig was dismissed, upon motion of the
plaintiff, does not unmake the said Lumauig as a general partner in the
defendant company. In so moving to dismiss the complaint, the plaintiff
merely condoned Lumauig's individual liability to the plaintiff.

On April 22, 1961, the defendant company, a general partnership duly

registered under the laws of the Philippines, purchased from the plaintiff a
motor vehicle on the installment basis and for this purpose executed a
promissory note for P9,440.00, payable in twelve (12) equal monthly
installments of P786.63, the first installment payable on or before May 22,
1961 and the subsequent installments on the 22nd day of every month
thereafter, until fully paid, with the condition that failure to pay any of said
installments as they fall due would render the whole unpaid balance
immediately due and demandable.

Having failed to receive the installment due on July 22, 1961, the plaintiff
sued the defendant company for the unpaid balance amounting to
P7,119.07. Benjamin C. Daco, Daniel A. Guizona, Noel C. Sim, Romulo B.
Lumauig, and Augusto Palisoc were included as co-defendants in their
capacity as general partners of the defendant company.

Daniel A. Guizona failed to file an answer and was consequently declared in

default.1

Subsequently, on motion of the plaintiff, the complaint was dismissed

insofar as the defendant Romulo B. Lumauig is concerned.

When the case was called for hearing, the defendants and their counsels
failed to appear notwithstanding the notices sent to them. Consequently,
the trial court authorized the plaintiff to present its evidence ex-parte, after
which the trial court rendered the decision appealed from.

The defendants Benjamin C. Daco and Noel C. Sim moved to reconsider the
decision claiming that since there are five (5) general partners, the joint and
subsidiary liability of each partner should not exceed one-fifth ( 1/5 ) of the
obligations of the defendant company. But the trial court denied the said
motion notwithstanding the conformity of the plaintiff to limit the liability
of the defendants Daco and Sim to only one-fifth ( 1/5 ) of the obligations of
the defendant company. Hence, this appeal.

Issue:

Whether or not the dismissal of the complaint to favor one of the general
partners of a partnership increases the joint and subsidiary liability of each
of the remaining partners for the obligations of the partnership

Ruling:

No.

Article 1816 of the Civil Code provides:

Art. 1816. All partners including industrial ones, shall

be liable pro rata with all their property and after all
the partnership assets have been exhausted, for the
contracts which may be entered into in the name and
for the account of the partnership, under its signature
and by a person authorized to act for the partnership.

MANUEL G. SINGSONG, JOSE BELZUNCE, AGUSTIN E. TONSAY, JOSE L.
ESPINOS, BACOLOD SOUTHERN LUMBER YARD, and OPPEN, ESTEBAN,
INC.,  vs. ISABELA SAWMILL, MARGARITA G. SALDAJENO and her
husband CECILIO SALDAJENO LEON GARIBAY, TIMOTEO
TUBUNGBANUA, and THE PROVINCIAL SHERIFF OF NEGROS
OCCIDENTAL, defendants, MARGARITA G. SALDAJENO and her
husband CECILIO SALDAJENO, G.R. No. L-27343, February 28, 1979,
FERNANDEZ, J.
It is true that the dissolution of a partnership is caused by any partner ceasing
to be associated in the carrying on of the business.  However, on dissolution,
the partnership is not terminated but continuous until the winding up to the
business. 
Facts:
On January 30, 1951 the defendants Leon Garibay, Margarita G. Saldejeno,
and Timoteo Tubungbanua entered into a Contract of Partnership under the
firm name "Isabela Sawmill",
On February 3, 1956 the plaintiff Oppen, Esteban, Inc. sold a Motor Truck
and two Tractors to the partnership Isabela Sawmill for the sum of
P20,500.00. In order to pay the said purcahse price, the said partnership
agreed to make arrangements with the International Harvester Company at
Bacolod City so that the latter would sell farm machinery to with the
understanding that the price was to be paid by the partnership.
Through the method of payment stipulated in the contract, the International
Harvester Company has been paid a total of P19,211.11, leaving an unpaid
balance of P1,288.89. On April 25, 1958 Civil Case No. 4797 was filed by the
spouses Cecilio Saldajeno and Margarita G. Saldajeno against the Isabela
Sawmill, Leon Garibay, and Timoteo Tubungbanua.
The defendants Leon Garibay, Timoteo Tubungbanua and Margarita G.
Saldajeno entered into a "Memorandum Agreement" and also executed a
document entitled "Assignment of Rights with Chattel Mortgage".
Thereafter the defendants Leon Garibay and Timoteo Tubungbanua did not
divide the assets and properties of the "Isabela Sawmill" between them, but
they continued the business of said partnership under the same firm name
"Isabela Sawmill".
On May 18, 1959 the Provincial Sheriff of Negros Occidental published two
(2) notices that he would sell at public auction on June 5, 1959 at Isabela,
Negros Occidental certain trucks, tractors, machinery, officeequipment and
other things that were involved in Civil Case No. 5223 of the Court of First
Instance of Negros Occidental. On October 15, 1969 the Provincial Sheriff of
Negros Occidental executed a Certificate of Sale in favor of the defendant
Margarita G. Saldajeno, as a result of the sale conducted by him on October
14 and 15, 1959 for the enforcement of the judgment rendered in Civil Case
No. 5223 of the Court of First Instance of Negros Occidental.
On June 5. 1959, Manuel G. Singsong, Jose Belzunce, Agustin E. Tonsay, Jose
L. Espinos, Bacolod Southern Lumber Yard, and Oppen, Esteban, Inc. filed in
the Court of first Instance of Negros Occidental, Branch I, against "Isabela
Sawmill", Margarita G. Saldajeno and her husband Cecilio Saldajeno, Leon
Garibay, Timoteo Tubungbanua and the Provincial Sheriff of Negros
Occidental a complaint praying that a writ of preliminary injunction be
issued restraining the defendant Provincial Sheriff of Negros Occidental
from proceeding with the sales at public auction that he advertised in two
notices issued by him on May 18, 1959.
In their amended answer, the defendants Margarita G. Saldajeno and her
husband, Cecilio Saldajeno, alleged the following special and affirmative
defenses:
xxx xxx xxx
Civil Law Review 2 | Atty. Legarda 8
Case Digest 2018 - PARTNERSHIP
That the defendant Isabela Sawmill has been dissolved by virtue of an
action entitled "In the matter of: Dissolution of Isabela Sawmill as
partnership, etc. Margarita G. Saldajeno et al. vs. Isabela Sawmill, et al., Civil
Case No. 4787, Court of First Instance of Negros Occidental;
That as a result of the said dissolution and the decision of the Court of First
Instance of Negros Occidental in the aforesaid case, the other defendants
herein Messrs. Leon Garibay and Timoteo Tubungbanua became the
successors-in-interest to the said defunct partnership and have bound
themselves to answere for any and all obligations of the defunct partnership
to its creditors and third persons;
That to secure the performance of the obligations of the other defendants
Leon Garibay and Timoteo Tubungbanua to the answering defendant
herein, the former have constituted a chattel mortgage over the properties
mentioned in the annexes to that instrument entitled "Assignment of Rights
with Chattel Mortgage" entered into on May 26, 1968 and duly registered in
the Register of Deeds of Negros Occidental on the same date.
On October 20, 1959 defendant Margarita G. Saldajeno executed a deed of
sale in favor of the Pan Oriental Lumber Company transfering to the latter
for the sum of P45,000.00 the trucks, tractors, machinery, and other things
that she had purchashed at a public auction referred to in the foregoing
paragraph.
Issue:
Whether or not the withdrawal of defendant- appellant Margarita Saldajeno
as a partner therein dissolved the partnership “Isabela Sawmill” (formed on
Jan. 30, 1951 among Leom Garibay, Timoteo Tubungbanua and Margarita
Saldejeno)
Ruling:
No.
It is true that the dissolution of a partnership is caused by any partner
ceasing to be associated in the carrying on of the business.  However, on
dissolution, the partnership is not terminated but continuous until the
winding up to the business. 
The remaining partners did not terminate the business of the partnership
"Isabela Sawmill". Instead of winding up the business of the partnership,
they continued the business still in the name of said partnership. It is
expressly stipulated in the memorandum-agreement that the remaining
partners had constituted themselves as the partnership entity, the "Isabela
Sawmill". 
There was no liquidation of the assets of the partnership. The remaining
partners, Leon Garibay and Timoteo Tubungbanua, continued doing the
business of the partnership in the name of "Isabela Sawmill". They used the
properties of said partnership.
The properties mortgaged to Margarita G. Saldajeno by the remaining
partners, Leon Garibay and Timoteo Tubungbanua, belonged to the
partnership "Isabela Sawmill." The appellant, Margarita G. Saldajeno, was
correctly held liable by the trial court because she purchased at public
auction the properties of the partnership which were mortgaged to her.
It does not appear that the withdrawal of Margarita G. Saldajeno from the
partnership was published in the newspapers. The appellees and the public
in general had a right to expect that whatever, credit they extended to Leon
Garibay and Timoteo Tubungbanua doing the business in the name of the
partnership "Isabela Sawmill" could be enforced against the proeprties of
said partnership. The judicial foreclosure of the chattel mortgage executed
in favor of Margarita G. Saldajeno did not relieve her from liability to the
creditors of the partnership.
 Civil Law Review 2 | Atty. Legarda 9
Case Digest 2018 - PARTNERSHIP

The appellant, margrita G. Saldajeno, cannot complain. She is partly to

blame for not insisting on the liquidaiton of the assets of the partnership.
She even agreed to let Leon Garibay and Timoteo Tubungbanua continue
doing the business of the partnership "Isabela Sawmill" by entering into the
memorandum-agreement with them.

Although it may be presumed that Margarita G. Saldajeno had action in good

faith, the appellees aslo acted in good faith in extending credit to the
partnership. Where one of two innocent persons must suffer, that person
who gave occasion for the damages to be caused must bear the
consequences. Had Margarita G. Saldajeno not entered into the
memorandum-agreement allowing Leon Garibay and Timoteo
Tubungbanua to continue doing the business of the partnership, the applees
would not have been misled into thinking that they were still dealing with
the partnership "Isabela Sawmill". Under the facts, it is of no moment that
technically speaking the partnership "Isabela Sawmill" was dissolved by the
withdrawal therefrom of Margarita G. Saldajeno. The partnership was not
terminated and it continued doping business through the two remaining
partners.

The contention of the appellant that the appleees cannot bring an action to
annul the chattel mortgage of the properties of the partnership executed by
Leon Garibay and Timoteo Tubungbanua in favor of Margarita G. Saldajeno
has no merit.

As a rule, a contract cannot be assailed by one who is not a party thereto.

However, when a contract prejudices the rights of a third person, he may
file an action to annul the contract.

This Court has held that a person, who is not a party obliged principally or
subsidiarily under a contract, may exercised an action for nullity of the
contract if he is prejudiced in his rights with respect to one of the
contracting parties, and can show detriment which would positively result
to him from the contract in which he has no intervention. 

The plaintiffs-appellees were prejudiced in their rights by the execution of

the chattel mortgage over the properties of the partnership "Isabela
Sawmill" in favopr of Margarita G. Saldajeno by the remaining partners,
Leon Garibay and Timoteo Tubungbanua. Hence, said appelees have a right
to file the action to nullify the chattel mortgage in question.