civ2 case digest 4d

San Beda College of Law, Mendiola, Manila

Case Digests in Civil Law Review 2

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JAIME D. ANG V. COURT OF APPEALS AND BRUNO SOLEDAD ................. 5

NUTRIMIX FEEDS CORPORATION V. COURT OF APPEALS AND

SPOUSES EFREN AND MAURA EVANGELISTA ............................................... 7

PARTNERSHIP, AGENCY & TRUST ...................................... 9

PASCUAL V. COMMISSIONER ON INTERNAL REVENUE AND COURT OF

TAX APPEALS ............................................................................................................. 9

ESTANISLAO, JR., V. COURT OF APPEALS ..................................................... 11

DAN FUE LEUNG V. INTERMEDIATE APPELLATE COURT AND LEUNG

YIU ............................................................................................................................... 12

HEIRS OF TAN ENG KEE V. CA AND BENGUET LUMBER COMPANY ..... 14

SARDANE VS. COURT OF APPEALS .................................................................. 15

SANTOS VS. SPOUSES ARSENIO AND NIEVES REYES ................................ 15

TOCAO VS. COURT OF APPEALS ........................................................................ 16

TORRES V. COURT OF APPEALS ........................................................................ 17

LIM TONG LIM V PHILIPPINE FISHING GEAR INDUSTRIES, INC .......... 18

EVANGELISTA & CO. V ESTRELLA ABAD SANTOS ...................................... 20

MOBIL OIL PHILIPPINES, INC., V. COURT OF FIRST INSTANCE OF

RIZAL, BRANCH VI, GEMINIANO F. YABUT AND AGUEDA ENRIQUEZ

YABUT ........................................................................................................................ 22

TABLE OF CONTENTS



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SY JUCO V. CASTRO ............................................................................................... 23

ROJAS V. MAGLANA .................................................................................................. 25

YU VS NLRC ................................................................................................................ 26

ORTEGA VS COURT OF APPEALS ...................................................................... 28

PIONEER INSURANCE VS COURT OF APPEALS ........................................... 29

CARMEN LIWANAG VS. THE HON. COURT OF APPEALS AND THE

PEOPLE OF THE PHILIPPINES .......................................................................... 30

CHOITHRAM JETHMAL RAMNANI AND/OR NIRMLA V. RAMNANI AND

MOTI G. RAMNANI VS. COURT OF APPEALS, SPOUSES ISHWAR

JETHMAL RAMNANI, SONYA JETHMAL RAMNANI AND OVERSEAS

HOLDING CO., LTD., ............................................................................................... 31

SUNGA-CHAN V. CHUA .......................................................................................... 32

EMNACE V. COURT OF APPEALS ....................................................................... 33

GENEVIEVE LIM V. FLORENCIO SABAN ......................................................... 34

MANILA MEMORIAL PARK INC. V LINSANGAN ............................................ 36

VICTORIAS MILLING CO., INC., PETITIONER, VS. COURT OF APPEALS

AND CONSOLIDATED SUGAR CORPORATION, RESPONDENTS. ............. 37

ROSA LIM, PETITIONER VS. COURT OF APPEALS AND PEOPLE OF THE

PHILIPPINES, RESPONDENTS. .......................................................................... 38

DOMINION INSURANCE CORPORATION VS. COURT OF APPEALS ........ 39

CONDE VS. COURT OF APPEALS ....................................................................... 41

UNILAND RESOURCES VS. DBP ......................................................................... 42

MANILA REMNANT CO. VS. CA ........................................................................... 43



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NAPOCOR V. NATIONAL MERCHANDISING CORPORATION .................... 45

SCHMID & OBERLY VS. RJL MARTINEZ FISHING CORPORATION ........ 46

BICOL SAVINGS AND LOAN ASSOCIATION VS. COURT OF APPEALS.... 47

CMS LOGGING INCORPORATED VS. COURT OF APPEALS ....................... 48

PROFESSIONAL SERVICES, INC. VS. NATIVIDAD AND ENRIQUE AGANA

...................................................................................................................................... 49

CARLOS SANCHEZ VS. MEDICARD PHILIPPINES, INC., ............................ 50

THE PHILIPPINE BANK OF COMMERCE VS. JOSE M. ARUEGO .............. 51

SIREDY ENTERPRISES, INC. VS.HON. COURT OF APPEALS AND

CONRADO DE GUZMAN ......................................................................................... 52

SUMAOANG V. JUDGE RTC BR. XXXI, GUIMBA, NUEVA ECIJA AND ATTY.

PASCUA ...................................................................................................................... 54

OLACO V. CO CHO CHIT ....................................................................................... 55

HUANG VS. COURT OF APPEALS ....................................................................... 56

THOMSON VS. COURT OF APPEALS ................................................................. 57

JOSUE ARLEGUI VS. HON. COURT OF APPEALS AND SPOUSES GIL AND

BEATRIZ GENGUYON ............................................................................................ 58

RUPERTO L. VILORIA, PETITIONER, VS. COURT OF APPEALS, LIDA C.

AQUINO ...................................................................................................................... 60

SECUYA V. VDA DE SELMA .................................................................................. 61

HEIRS OF SALVADOR HERMOSILLA VS. SPOUSES REMOQUILLO ........ 62

ELENA J. TOMAS ET AL VS COURT OF APPEALS ......................................... 64



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FILIPINAS PORT SERVICES, INC., REPRESENTED BY ELIODORO C.

CRUZ AND MINDANAO TERMINAL AND BROKERAGE SERVICES, INC. VS

VICTORIANO S. GO ET AL. ................................................................................... 65

VDA. DE CABRERA VS. COURT OF APPEALS ................................................. 66

SPOUSES RICARDO PASCUAL VS. COURT OF APPEALS ........................... 69

CREDIT TRANSACTIONS ................................................... 72

ACME SHOE, RUBBER & PLASTIC CORPORATION VS. COURT OF

APPEALS .................................................................................................................... 72

NAVOA VS. COURT OF APPEALS ........................................................................ 74

REPUBLIC V. PHILIPPINE NATIONAL BANK, THE FIRST NATIONAL

CITY BANK OF NEW YORK, ET AL. .................................................................... 76

PEOPLE V. VENANCIO CONCEPCION .............................................................. 77

BONNEVIE V. CA ..................................................................................................... 79

FRANCISCO HERRERA VS. PETROPHIL CORPORATION .......................... 82

SAURA IMPORT AND EXPORT CO VS.DEVELOPMENT BANK OF THE

PHILIPPINES ........................................................................................................... 83

CENTRAL BANK V. COURT OF APPEALS ........................................................ 83

REPUBLIC V. JOSE V. BAGTAS. ET. AL. ........................................................... 85

MINA, ET AL. V. RUPERTA PASCUAL, ET AL. ................................................. 86

CATHOLIC VICAR APOSTOLIC OF THE MOUNTAIN PROVINCE, VS.

COURT OF APPEALS, HEIRS OF EGMIDIO OCTAVIANO AND JUAN

VALDEZ ...................................................................................................................... 88

MARGARITA QUINTOS AND ANGEL A. ANSALDO VS. BECK ..................... 89



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CEBU INTERNATIONAL FINANCE CORP. V. COURT OF APPEALS ......... 90

MAMBULAO LUMBER COMPANY. V. PHILIPPINE NATIONAL BANK ..... 91

LIAM LAW VS. OLYMPIC SAWMILL CO. ET. AL. ............................................. 93

SPOUSES FLORANTE ET. AL. VS. PILAR DEVELOPMENT CORPORATION

...................................................................................................................................... 94

SEVERINO TOLENTINO AND POTENCIANA MANIO VS. BENITO

GONZALEZ SY CHIAM ............................................................................................ 95

THE COSOLIDATED BANK AND TRUST CORPORATION (SOLIDBANK) VS.

THE COURT OF APPEALS, CONTINENTAL CEMENT CORPORATION,

GREGORY T. LIM AND SPOUSE .......................................................................... 97

COLINARES V. COURT OF APPEALS ................................................................ 99

REPUBLIC OF THE PHILIPPINES V. GRIJALDO ......................................... 100

JAIME D. ANG V. COURT OF APPEALS AND BRUNO SOLEDAD

G.R. No. 177874; September 29, 2008

FACTS:

Respondent Soledad sold his car to petitioner Ang by Deed of Absolute Sale dated July 28,

1992. Ang later offered the car he bought from Soldedad, for sale which was eventually sold

to Paul Bugash. However, the vehicle was seized by virtue of a writ of replevin on account of

the alleged failure of Ronaldo Panes, the owner of the vehicle prior to Soledad, to pay the

mortgage debt constituted thereon.

To secure the release of the vehicle, Ang paid BA Finance but Soledad refused to reimburse

the said amount, despite repeated demands. Ang filed on July 15, 1996 with the MTCC a

complaint which was however dismissed on the ground of prescription since more than 6

months elapsed from the delivery of the subject vehicle to the plaintiff buyer to the filing of

this action, pursuant to Article 1571.

Ang appealed to the RTC which affirmed the dismissal of the complaint but required

defendant to reimburse the amount plaintiff paid BA Finance Corporation. Soledads Motion for Reconsideration was denied hence, he elevated the case to the Court of Appeals and

accordingly reversed the RTC decision and denied the petition.



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Hence, the present recourse petition for review on certiorari, Ang maintaining that his cause of action had not yet prescribed when he filed the complaint and he should not be

blamed for paying the mortgage debt.

ISSUE:

1. Whether or not the defendant Soledad in executing the Deed of Absolute Sale

declaring that, I hereby covenant my absolute ownership to (sic) the above-described property and the same is free from all liens and encumbrances xxx ,made an EXPRESS warranty, the prescriptive period for which is that specified in the contract,

and in the absence of such period, the general rule on rescission of contract, which is

four years; or an IMPLIED warranty which prescribes six months from the date of

delivery of the thing sold.

2. Whether or not petitioner Ang is entitled to damages for warranty against eviction by

virtue of the writ of replevin issued on account of the alleged failure of Ronaldo Panes,

the owner of the vehicle prior to Soledad, to pay the mortgage debt constituted on the

subject vehicle and pursuant to the declaration of defendant Soledad in the Absolute

Sale that, I will defend the same from all claims or any claim whatsoever; will save the vendee from any suit by the government of the Republic of the Philippines.

HELD:

In declaring that he owned and had clean title to the vehicle at the time the Deed of

Absolute Sale was forged, Soledad gave an implied warranty of title. In pledging that he "will

defend the same from all claims or any claim whatsoever [and] will save the vendee from any

suit by the government of the Republic of the Philippines," Soledad gave a warranty against

eviction.

A warranty is a statement or representation made by the seller of goods,

contemporaneously and as part of the contract of sale, having reference to the character,

quality or title of the goods, and by which he promises or undertakes to insure that certain

facts are or shall be as he then represents them.

Warranties by the seller may be express or implied. Art. 1546 of the Civil Code defines

express warranty as any affirmation of fact or any promise by the seller relating to the thing

is an express warranty if the natural tendency of such affirmation or promise is to induce the

buyer to purchase the same, and if the buyer purchases the thing relying thereon.

On the other hand, an implied warranty is that which the law derives by application

or inference from the nature of the transaction or the relative situation or circumstances of

the parties, irrespective of any intention of the seller to create it. Among the implied warranty

provisions of the Civil Code are: as to the sellers title (Art. 1548), against hidden defects and encumbrances (Art. 1561), as to fitness or merchantability (Art. 1562), and against eviction

(Art. 1548).

Since what Soledad, as seller, gave was an implied warranty, the prescriptive period

to file a breach thereof is six months after the delivery of the vehicle, following Art. 1571.

Angs action therefore has already prescribed. On the merits of his complaint for damages, Ang cannot recover damages for breach

of warranty against eviction due to the absence of the following essential requisites for such

breach, vz:



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"A breach of this warranty requires the concurrence of the

following circumstances:

(1) The purchaser has been deprived of the whole or part of the

thing sold;

(2) This eviction is by a final judgment;

(3) The basis thereof is by virtue of a right prior to the sale made

by the vendor; and

(4) The vendor has been summoned and made co-defendant in

the suit for eviction at the instance of the vendee.

For one, there is no judgment which deprived Ang of the vehicle. For another, there

was no suit for eviction in which Soledad as seller was impleaded as co-defendant at the

instance of the vendee.

NUTRIMIX FEEDS CORPORATION V. COURT OF APPEALS AND SPOUSES EFREN AND MAURA EVANGELISTA

G.R. No. 152219; October 25, 2004

FACTS:

Respondent spouses herein started to directly procure various kinds of animal feeds

from petitioner Nutrimix Feeds Corporation. Initially, the respondents were good paying

customers. In some instances, however, they failed to issue checks despite the deliveries of

animal feeds which were appropriately covered by sales invoices. Consequently, the

respondents incurred an aggregate unsettled account with the petitioner. The petitioner

made several demands for the respondents to settle their unpaid obligation, but the latter

failed and refused to pay their remaining balance with the petitioner.

Petitioner filed with RTC a complaint, against the respondents for sum of money and

damages with a prayer for issuance of writ of preliminary attachment. In their answer with

counterclaim, the respondents admitted their unpaid obligation but impugned their liability

to the petitioner. They contended that inasmuch as the sudden and massive death of their

animals was caused by the contaminated products of the petitioner, the nonpayment of their

obligation was based on a just and legal ground.

The respondents also lodged a complaint for damages against the petitioner for the

untimely and unforeseen death of their animals supposedly effected by the adulterated

animal feeds the petitioner sold to them. Petitioner moved to dismiss the respondents complaint on the ground of litis pendentia. The trial court denied the same and the petitioner

alleged that the death of the respondents animals was due to the widespread pestilence in their farm. The petitioner, likewise, maintained that it received information that the



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respondents were in an unstable financial condition and even sold their animals to settle

their obligations from other enraged and insistent creditors. It, moreover, theorized that it

was the respondents who mixed poison to its feeds to make it appear that the feeds were

contaminated.

ISSUE:

Is the petitioner corporation guilty of breach of warranty due to hidden defects despite

a finding that there was a difference of approximately three months from delivery of the

animal feeds, to respondent spouses, to the time the animals died and the animal feeds were

examined?

RULING:

A difference of approximately three months enfeebles the respondents theory that the petitioner is guilty of breach of warranty by virtue of hidden defects. In a span of three

months, the feeds could have already been contaminated by outside factors and subjected to

many conditions unquestionably beyond the control of the petitioner.

The provisions on warranty against hidden defects are found in Articles 1561 and

1566 of the New Civil Code of the Philippines. A hidden defect is one which is unknown or

could not have been known to the vendee. Under the law, the requisites to recover on account

of hidden defects are as follows:

(a) the defect must be hidden;

(b) the defect must exist at the time the sale was made;

(c) the defect must ordinarily have been excluded from

the contract;

(d) the defect, must be important (renders thing UNFIT

or considerably decreases FITNESS);

(e) the action must be instituted within the statute of

limitations.

In the sale of animal feeds, there is an implied warranty that it is reasonably fit and

suitable to be used for the purpose which both parties contemplated. To be able to prove

liability on the basis of breach of implied warranty, three things must be established by the

respondents. The first is that they sustained injury because of the product; the second is that

the injury occurred because the product was defective or unreasonably unsafe; and finally,

the defect existed when the product left the hands of the petitioner. A manufacturer or seller

of a product cannot be held liable for any damage allegedly caused by the product in the



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absence of any proof that the product in question was defective. The defect must be present

upon the delivery or manufacture of the product; or when the product left the sellers or manufacturers control; or when the product was sold to the purchaser; or the product must have reached the user or consumer without substantial change in the condition it was sold.

Tracing the defect to the petitioner requires some evidence that there was no tampering with,

or changing of the animal feeds. The nature of the animal feeds makes it necessarily difficult

for the respondents to prove that the defect was existing when the product left the premises

of the petitioner.

A review of the facts of the case would reveal that the petitioner delivered the animal

feeds, allegedly containing rat poison, on July 26, 1993; but it is astonishing that the

respondents had the animal feeds examined only on October 20, 1993, or barely three months

after their broilers and hogs had died. It bears stressing, too, that the chickens brought for

laboratory tests were healthy animals, and were not the ones that were ostensibly poisoned.

There was even no attempt to have the dead fowls examined. Neither was there any analysis

of the stomach of the dead chickens to determine whether the petitioners feeds really caused their sudden death. Mere sickness and death of the chickens is not satisfactory evidence in

itself to establish a prima facie case of breach of warranty. Likewise, there was evidence

tending to show that the respondents combined different kinds of animal feeds and that the

mixture was given to the animals.

In essence, we hold that the respondents failed to prove that the petitioner is guilty of

breach of warranty due to hidden defects. It is, likewise, rudimentary that common law

places upon the buyer of the product the burden of proving that the seller of the product

breached its warranty. The bevy of expert evidence adduced by the respondents is too shaky

and utterly insufficient to prove that the Nutrimix feeds caused the death of their animals.

For these reasons, the expert testimonies lack probative weight. The respondents case of breach of implied warranty was fundamentally based upon the circumstantial evidence that

the chickens and hogs sickened, stunted, and died after eating Nutrimix feeds; but this was

not enough to raise a reasonable supposition that the unwholesome feeds were the proximate

cause of the death with that degree of certainty and probability required.

PARTNERSHIP, AGENCY & TRUST

PASCUAL V. COMMISSIONER ON INTERNAL REVENUE AND COURT OF TAX APPEALS G.R. No. 78133; October 18, 1988

FACTS:



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Petitioners bought 2 parcels of land on June 2, 1965 and another 3 parcels of land on May 28,

1966. The first 2 parcels of land were then sold in 1968, and the 3 parcels of land were sold

in 1970. From their realized net profit from both sales, they incurred a capital gains tax which

they paid in 1973 and 1974 by availing of the tax amnesties granted in the said years. In

1979, Acting BIR Commissioners Plana, sent a letter to the petitioners stating that they were

assessed and required to pay an amount of P107, 101.70 as alleged deficiency corporate

income taxs for the years 1968 and 1970.

Petitioners protested the said assessment in a letter of June 26, 1979 asserting that they had

availed of tax amnesties way back in 1974.Respondent Commissioner informed the

petitioners that in the 1968 and 1970, the petitioner as co-owners in the real estate

transactions formed an unregistered partnership or joint venture taxable as a corporation

under Section 20(b) and Sec 24 of the NIRC. It was mentioned that the unregistered

partnership was subject to corporate income tax and that the availment of tax

amnesty did not relieve the,m from the tax liability of the unregistered

partnership. Hence the petitioners were required to pay the deficiency income tax assessed.

Petitioners filed a petition for review with the CTA. But it affirmed the the decision of the

CIR. Hence this case.

ISSUE:

Whether or not petitioners who are co-owners of the parcels of land they sold, formed an

unregistered partnership

HELD:

The CIR and the CTA based their decision in the Evangelista case where the petitioners

therein borrowed a sum of money from their father, and together with their personal funds

they used the same for buying several properties. They appointed their brother to manage

their properties with full power to lease, collect, rent, issue receipts, etc. They had the real

properties rented or leased to various tenants for several years and they gained net profits

from the rental income. Thus, the Collector of Internal Revenue demanded the payment of

income tax on a corporation, among others, from them. In Evangelista case, there was a

series of transactions where petitioners purchased 24 lots showing that the purpose was not limited to the conservation or preservation of the common fund or even the properties

acquired by them. The character of habituality peculiar to business transactions engaged in for the purpose of gain was present.

However, in the present case, there was no evidence that petitioners entered into an

agreement to contribute money, property or industry to a common fund, and that they

intended to divide the profits among themselves. Respondent commissioner just assumed

these conditions to be present on the basis of the fact that petitioners purchased certain

parcels of land and became co-owners thereof. The transactions in the present case were

isolated. The character of habituality peculiar to business transactions for the purpose of gain

was not present.

In order to constitute a partnership inter sese there must be: (a) An intent to form the same;

(b) generally participating in both profits and losses; (c) and such a community of interest, as



11

far as third persons are concerned as enables each party to make contract, manage the

business, and dispose of the whole property. (Municipal Paving Co. vs. Herring)

It is evident that an isolated transaction whereby two or more persons contribute funds to

buy certain real estate for profit in the absence of other circumstances showing a contrary

intention cannot be considered a partnership. The sharing of returns does not in itself

establish a partnership whether or not the persons sharing therein have a joint or common

right or interest in the property. There must be a clear intent to form a partnership, the

existence of a juridical personality different from the individual partners, and the freedom of

each party to transfer or assign the whole property.

In the present case, there is clear evidence of co-ownership between the petitioners. There is

no adequate basis to support the proposition that they thereby formed an unregistered

partnership. The two isolated transactions whereby they purchased properties and sold the

same a few years thereafter did not thereby make them partners. They shared in the gross

profits as co- owners and paid their capital gains taxes on their net profits and availed of the

tax amnesty thereby. Under the circumstances, they cannot be considered to have formed an

unregistered partnership which is thereby liable for corporate income tax, as the respondent

commissioner proposes.

ESTANISLAO, JR., V. COURT OF APPEALS G.R. No. L-49982; April 27, 1988

FACTS:

Petitioner and private respondents are brothers and sisters who are co-owners of certain lots

at the corner of Annapolis and Aurora Blvd., Quezon City which were then being leased to

the Shell Company of the Philippines Limited (SHELL). They agreed to open and operate a

gas station thereat to be known as Estanislao Shell Service Station with an initial investment

of P 15,000.00 to be taken from the advance rentals due to them from SHELL for the

occupancy of the said lots owned in common by them. A joint affidavit was executed by them

on April 11, 1966. The petitione was allowed to operate and manage the gasoline service

station of the family.

The parties entered into an Additional Cash Pledge Agreement with SHELL wherein it was

reiterated that the P 15,000.00 advance rental shall be deposited with SHELL to cover

advances of fuel to petitioner as dealer with a proviso that said agreement "cancels and

supersedes the Joint Affidavit dated 11 April 1966 executed by the co-owners.

Petitioner contends that because of the said stipulation cancelling and superseding that

previous Joint Affidavit, whatever partnership agreement there was in said previous

agreement had thereby been abrogated.

ISSUE:

Whether or not a partnership exists between members of the same family arising from their

joint ownership of certain properties?



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Whether or not the proviso "cancels and supersedes the Joint Affidavit dated 11 April 1966

executed by the co-owners dissolved the existing partnership between the parties?

HELD:

There is evidently an existing partnership between the parties herein but the contention of

the petitioner that the proviso in the subsequent document abrogates the existing

partnership agreement between him and the private respondents, is not correct.

In the subsequent document entitled "Additional Cash Pledge Agreement," the private

respondents and petitioner assigned to SHELL the monthly rentals due them commencing

the 24th of May 1966 until such time that the monthly rentals accumulated equal P 15,000.00

which private respondents agree to be a cash deposit of petitioner in favor of SHELL to

increase his credit limit as dealer. It provided therein that "This agreement, therefore,

cancels and supersedes the Joint Affidavit dated 11 April 1966 executed by the CO-

OWNERS." This cancelling provision was necessary for the Joint Affidavit speaks of P

15,000.00 advance rentals starting May 25, 1966 while the latter agreement also refers to

advance rentals of the same amount starting May 24, 1966. There is a mere duplication of

reference to the P 15,000.00 hence the need to provide in the subsequent document that it

"cancels and supersedes" the previous one.

Other evidence in the record shows that there was in fact such partnership agreement

between the parties. This is attested by the testimonies of private respondent Remedies

Estanislao and Atty. Angeles. Petitioner submitted to private respondents periodic

accounting of the business. Petitioner gave a written authority to private respondent

Remedies Estanislao, his sister, to examine and audit the books of their "common

business'. Respondent Remedios assisted in the running of the business.

There is no doubt that the parties hereto formed a partnership when they bound themselves

to contribute money to a common fund with the intention of dividing the profits among

themselves. The sole dealership by the petitioner and the issuance of all government permits

and licenses in the name of petitioner was in compliance with the afore-stated policy of

SHELL and the understanding of the parties of having only one dealer of the SHELL

products.

DAN FUE LEUNG V. INTERMEDIATE APPELLATE COURT AND LEUNG YIU

G.R. No. 70926; January 31, 1989

What is the prescriptive period within which a partner may demand an accounting?

DOCTRINE: The right to demand an accounting exists as long as the partnership exists.

Prescription begins to run only upon the dissolution of the partnership when the final

accounting is done.



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FACTS:

Respondent Leung Yiu filed a complaint to recover the sum equivalent to 22% of the annual

profits derived from the operation of Sun Wah Panciteria from petitioner Dan Fue Leung.

Although registered as a single proprietorship in the name of petitioner Dan Fue Leung,

respondent claimed that Sun Wah Panciteria, a restaurant, was actually a partnership and

that he was one of the partners having contributed P4,000.00 to its initial establishment.

Respondent adduced evidence that about the time Sun Wah Panciteria started to become

operational, he gave P4,000.00 as his contribution to the partnership evidenced by a receipt

wherein the petitioner acknowledged his acceptance. Furthermore, private respondent

received from petitioner the amount of P12,000.00 from the profits of the operation of the

restaurant for the year 1974.

The petitioner denied the existence of partnership and maintained that Sun Wah Panciteria

was a sole proprietorship. When the IAC ruled that the records sufficiently established that

there was a partnership, petitioner raised the issue of prescription. He argued that IAC

gravely erred in not resolving the issue of prescription in his favor. The alleged receipt is

dated October 1, 1955 and the complaint was filed only on July 13, 1978 or after the lapse of

22 years, 9 months and 12 days. From October 1, 1955 to July 13, 1978, no written

demands were ever made by private respondent. The petitioner's argument is based on

Article 1144 in relation to Article 1155 of the Civil Code.

ISSUE:

Whether respondents right to demand an accounting has prescribed?

HELD:

No. The private respondent is a partner of the petitioner in Sun Wah Panciteria. A partner

shares not only in profits but also in the losses of the firm. If excellent relations exist among

the partners at the start of business and all the partners are more interested in seeing the

firm grow rather than get immediate returns, a deferment of sharing in the profits is perfectly

plausible. It would be incorrect to state that if a partner does not assert his rights anytime

within ten years from the start of operations, such rights are irretrievably lost. The private

respondent's cause of action is premised upon the failure of the petitioner to give him the

agreed profits in the operation of Sun Wah Panciteria. In effect the private respondent was

asking for an accounting of his interests in the partnership.

Regarding the prescriptive period within which the private respondent may demand an

accounting, Articles 1806, 1807, and 1809 show that the right to demand an accounting exists

as long as the partnership exists. Prescription begins to run only upon the dissolution of the

partnership when the final accounting is done.



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HEIRS OF TAN ENG KEE V. CA AND BENGUET LUMBER COMPANY

G.R. No. 126881; October 3, 2000

Is the lack of a demand for periodic accounting during the lifetime of an alleged

partner evidence that there was no partnership?

DOCTRINE: The essence of a partnership is that the partners share in the profits and losses.

Each has the right to demand an accounting as long as the partnership exists. We have

allowed a scenario wherein [i]f excellent relations exist among the partners at the start of the business and all the partners are more interested in seeing the firm grow rather than get

immediate returns, a deferment of sharing in the profits is perfectly plausible. But in the situation in the case at bar, the deferment, if any, had gone on too long to be plausible. A

person is presumed to take ordinary care of his concerns. A demand for periodic accounting

is evidence of a partnership.

FACTS:

Following the death of Tan Eng Kee petitioners as heirs filed suit against the decedents brother TAN ENG LA. The complaint, was for accounting, liquidation and winding up of the

alleged partnership formed after World War II between Tan Eng Kee and Tan Eng

Lay. Petitioners filed an amended complaint impleading private respondent BENGUET

LUMBER COMPANY.

The amended complaint principally alleged that after the second World War, Tan Eng

Kee and Tan Eng Lay, pooling their resources and industry together, entered into a

partnership engaged in the business of selling lumber and hardware and construction

supplies. They named their enterprise Benguet Lumber which they jointly managed until Tan Eng Kees death. However, they claimed that in 1981, Tan Eng Lay and his children caused the conversion of the partnership Benguet Lumber into a corporation called Benguet Lumber Company. The incorporation was purportedly a ruse to deprive Tan Eng Kee and his heirs of their rightful participation in the profits of the business. Petitioners

prayed for accounting of the partnership assets, and the dissolution, winding up and

liquidation thereof, and the equal division of the net assets of Benguet Lumber.

ISSUE:

Whether there was a partnership in a situation where an alleged partner have never

requested for accounting nor distribution for himself of profits from the enterprise.

HELD:

There was no partnership. It is indeed odd, if not unnatural, that despite the forty years the partnership was allegedly in existence, Tan Eng Kee never asked for an

accounting. The essence of a partnership is that the partners share in the profits and

losses. Each has the right to demand an accounting as long as the partnership exists. We

have allowed a scenario wherein [i]f excellent relations exist among the partners at the start of the business and all the partners are more interested in seeing the firm grow rather than

get immediate returns, a deferment of sharing in the profits is perfectly plausible. But in



15

the situation in the case at bar, the deferment, if any, had gone on too long to be plausible. A

person is presumed to take ordinary care of his concerns.

A demand for periodic accounting is evidence of a partnership. During his lifetime,

Tan Eng Kee appeared never to have made any such demand for accounting from his brother,

Tang Eng Lay.

SARDANE VS. COURT OF APPEALS

G.R. No. L-47045 November 22, 1988

FACTS:

Private Respondent Acojedo brought an action in the City Court of Dipolog for collection of a

sum of P5,217.25 based on promissory notes executed by the herein petitioner Nobio Sardane

in his favor. In his oral testimony, Sardane contended that a partnership existed between

him and Acojedo making the promissory notes merely receipts for the contributions to said

partnership.

ISSUE:

Whether a partnership exist between Private Respondent Acojedo, who received shares on

the enterprise profits as salary and Petitioner Sardane.

RULING:

None. Article 1769(4) of the Civil Code is explicit that while the receipt by a person of a share

of the profits of a business is prima facie evidence that he is a partner in the business, no

such inference shall be drawn if such profits were received in payment as wages of an

employee.

In this case, as manager of the business of Acojedo, Sarcado naturally has some degree of

control over the operations and maintenance thereof. The fact that he had received 50% of

the net profits does not conclusively establish that he was a partner of the private respondent

herein. Furthermore, herein Sardane had no voice in the management of the affairs of the

business.

SANTOS VS. SPOUSES ARSENIO AND NIEVES REYES

G.R. No. 135813; October 25, 2001

FACTS:



16

Petitioner Fernando Santos and Respondent Nieves Reyes were introduced to each other by

one Meliton Zabat regarding a lending business venture proposed by Nieves. It was verbally

agreed that Santos act as financier while Nieves and Zabat would take charge of solicitation

of members and collection of loan payments.Santos would also receive 70% of the profits while

Nieves and Zabat would earn 15% each.

Petitioner and Gragera, as representative of Monte Maria Development Corporation

subsequently executed an agreement providing funds for Monte Maria's members. Under the

agreement, Monte Maria, represented by Gragera, was entitled to P1.31 commission per

thousand paid daily to Santos.

Santos and Nieves later discovered that their partner Zabat engaged in the same lending

business in competition with their partnership. Zabat was thereby expelled from the

partnership.

Santos filed a complaint for recovery of sum of money and damages against respondents

Reyes allegedly in their capacities as employees with having misappropriated funds intended

for Gragera In their answer, respondents Reyes asserted that they were partners and not

mere employees of Santos.

ISSUE:

Whether or not a partnership exist between Santos and Spouses Reyes.

RULING:

Yes. By the contract of partnership, two or more persons bind themselves to contribute

money, property or industry to a common fund, with the intention of dividing the profits

among themselves.1The "Articles of Agreement" stipulated that the signatories shall share

the profits of the business in a 70-15-15 manner, with petitioner getting the lion's share. This

stipulation clearly proved the establishment of a partnership.

TOCAO VS. COURT OF APPEALS

G.R. No. 127405; October 4, 2000

FACTS:

Nenita Anay met petitioner William Belo through her former employer in Bangkok. Belo

introduced Anay to petitioner Marjorie Tocao, who conveyed her desire to enter into a joint

venture with her for the importation and local distribution of kitchenwares. Belo volunteered

to finance the joint venture and assigned Anay the job of marketing the product, considering

her experience and relationship with West Bend Company, a manufacturer of kitchen wares

in the US. In the said joint venture, Belo was the capitalist, Tocao was made President and

General Manager, and Anay as the Head of the Marketing Department and later the Vice-

President for Sales. The parties agreed further that Anay would be entitled to: (1) ten percent

(10%) of the annual net profits of the business; (2) overriding commission of six percent (6%)



17

of the overall weekly production; (3) thirty percent (30%) of the sales she would make; and

(4) two percent (2%) for her demonstration services. They operated under the name of

Geminesse Enterprise, a sole proprietorship registered in Marjorie Tocaos name.

Anay later undertook the task of saving their business accounts due to unsatisfactory sales

records. She was then entitled to 37% commission for her personal sales as indicated in a

memo signed by Belo which will last till December 21, 1987. On October 9, 1987, Anay

learned that Tocao signed a letter addressed to their Cubao sales office that she was no longer

the Vice-President of Geminesse Enterprise. The following day, she received a note that

Tocao had barred her from holding office in both their Makati and Cubao offices. Anay

attempted to contact Belo demanding for her overriding commission for the period of January

8, 1988 to February 5, 1988 and the audit of the company to determine her share in the

net profits, but her letters were left unanswered by the same. Anay then filed a complaint

for sum of money with damages against Tocao and Belo before the RTC of Makati. In their

answer, Marjorie Tocao and Belo asserted that the alleged agreement with Anay that was neither reduced in writing, nor ratified, was either unenforceable or void or inexistent. They alleged that Anay merely acted as marketing demonstrator of Geminesse Enterprise

for an agreed remuneration. Belo denied contributing capital to the business or receiving a

share in the profits because he merely served as a guarantor of Tocao. Tocao, on the other

hand, denied having entered into an oral partnership agreement with Anay. She admitted,

however, that Anay was granted commissions due to her expertise in the cookware business.

Both the RTC and the CA ruled in favor of Anay, hence, this petition.

ISSUE:

Whether or not Anay was a partner of Tocao and Belo and not a mere employee.

RULING:

Yes, Anay was in fact an industrial partner and not that of a mere employee of Tocao and

Belo. Petitioners admit that Anay had the expertise to engage in the business of

distributorship of cookware. Private respondent contributed such expertise to the

partnership and hence, under the law, she was the industrial or managing partner. It was

through her reputation with the West Bend Company that the partnership was able to open

the business of distributorship of that companys cookware products; it was through the same efforts that the business was propelled to financial success.

TORRES V. COURT OF APPEALS

G.R. No. 134559; December 09, 1999

FACTS:

Petitioners and respondent entered into a joint venture agreement for the development of a

parcel land located at Lapu-Lapu City island of Mactan into a subdivision. Pursuant to the



18

contract, petitioners executed a deed of sale covering the said parcel of land in favor of the

respondent, who then had it registered in his name. Thereafter, respondent mortgaged the

property in the bank, and according to the joint agreement, the money obtained amounting

to P40,000.00 was to be used for the development of the subdivision. However, the project did

not push through, and the land was subsequently foreclosed by the bank. Because of this,

petitioners filed a civil case before the Regional Trial Court of Cebu City, which was later

dismissed by the trial court.

On appeal, the Court of Appeals affirmed the decision of the trial court. The appellate court

held that the petitioner and respondent had formed a partnership for the development of the

subdivision. Thus, they must bear the loss suffered by the partnership in the same proportion

as their share in the profits stipulated in the contract. Aggrieved by the decision, petitioner

filed the instant petition contending that the Court of Appeals erred in concluding that the

transaction between the petitioners and respondent was that of a joint venture/partnership.

ISSUE:

Whether a joint venture existed between the petitioner and respondent.

RULING:

Yes, the Court held that a reading of the terms of the Joint Venture Agreement indubitably

showed the existence of a partnership pursuant to Article 1767 of the Civil Code. The Joint

Venture Agreement clearly states that the consideration for the sale was the expectation of

profits from the subdivision project. Its first stipulation states that petitioners did not

actually receive payment for the parcel of land sold to respondent. Consideration, more

properly denominated as cause, can take different forms, such as the prestation or promise

of a thing or service by another. In this case, the cause of the contract of sale consisted not in

the stated peso value of the land, but in the expectation of profits from the subdivision project,

for which the land was intended to be used. As explained by the trial court, "the land was in

effect given to the partnership as [petitioner's] participation therein. . . . There was therefore

a consideration for the sale, the [petitioners] acting in the expectation that, should the

venture come into fruition, they [would] get sixty percent of the net profits."

LIM TONG LIM V PHILIPPINE FISHING GEAR INDUSTRIES, INC

G.R. No. 136448, November 3, 1999

FACTS:

On behalf of "Ocean Quest Fishing Corporation," Antonio Chua and Peter Yao entered into

a Contract with Philippine Fishing Gear Industries, Inc. (respondent) for the purchase of

fishing nets (P532,045) and floats (P68,000). They claimed that they were engaged in a

business venture with Petitioner Lim Tong Lim, who however was not a signatory to the

agreement.



19

The buyers, however, failed to pay for the fishing nets and the floats; hence, private

respondents filed a collection suit against Chua, Yao and Petitioner Lim Tong Lim, as

general partners, with a prayer for a writ of preliminary attachment. Responded alleges

that "Ocean Quest Fishing Corporation" was a nonexistent corporation as shown by a

Certification from the SEC.

The trial court ruled that the respondent was entitled to the Writ of Attachment and that

Chua, Yao and Lim, as general partners, were jointly liable to pay respondent. Lim

appealed to the CA which affirmed RTCs decision. The CA held that petitioner was a

partner of Chua and Yao in a fishing business and may thus be held liable as such for the

fishing nets and floats purchased by and for the use of the partnership.

Below are some of the factual findings of the lower courts: (1)That Petitioner requested

Yao who was engaged in commercial fishing to join him, while Chua was already Yao's

partner; (2) That after convening for a few times, Lim, Chua, and Yao verbally agreed to

acquire two fishing boats (3) That they borrowed P3.25 million from Jesus Lim, brother of

Petitioner Lim Tong Lim, to finance the venture; (8)That subsequently, a civil case was

filed by Chua and Yao against Lim for (a) declaration of nullity of commercial documents;

(b) reformation of contracts; (c) declaration of ownership of fishing boats; (d) injunction; and

(e) damages; and (9)That the case was amicably settled through a Compromise Agreement

executed between the parties-litigants the terms of which are already enumerated above.

According to the CA, the evidence establishes that all the defendants including herein

appellant Lim Tong Lim undertook a partnership for a specific undertaking, that is for

commercial fishing. Obviously, the ultimate undertaking of the defendants was to divide

the profits among themselves which is what a partnership essentially is.

ISSUE:

Whether the petitioner is liable as a general partner in a contract entered into on behalf of

an unincorporated association or ostensible corporation in which he did not take direct part

of.

RULING:

Yes. The liability for a contract entered into on behalf of an unincorporated association or

ostensible corporation may lie in a person who may not have directly transacted on its

behalf, but reaped benefits from that contract.

From the factual findings of both lower courts, it is clear that Chua, Yao and Lim had

decided to engage in a fishing business, which they started by buying boats financed by a

loan secured from Jesus Lim. In their Compromise Agreement, they subsequently revealed

their intention to pay the loan with the proceeds of the sale of the boats, and to divide

equally among them the excess or loss. These boats, the purchase and the repair of which

were financed with borrowed money, fell under the term "common fund" under Article 1767.

The contribution to such fund need not be cash or fixed assets; it could be an intangible like

credit or industry. That the parties agreed that any loss or profit from the sale and



20

operation of the boats would be divided equally among them also shows that they had

indeed formed a partnership.

It is difficult to disagree with the RTC and the CA that Lim, Chua and Yao decided to form

a corporation. Although it was never legally formed for unknown reasons, this fact alone

does not preclude the liabilities of the three as contracting parties in representation of it.

Clearly, under the law on estoppel, those acting on behalf of a corporation and those

benefited by it, knowing it to be without valid existence, are held liable as general

partners.

Technically, it is true that petitioner did not directly act on behalf of the corporation.

However, having reaped the benefits of the contract entered into by persons with whom he

previously had an existing relationship, he is deemed to be part of said association and is

covered by the scope of the doctrine of corporation by estoppels.

EVANGELISTA & CO. V ESTRELLA ABAD SANTOS G.R. No. L-31684, June 28, 1973

FACTS:

On October 9, 1954 a co-partnership was formed under the name of "Evangelista & Co."

and On June 7, 1955, the Articles of Co-partnership was amended as to include herein

respondent, Estrella Abad Santos, as industrial partner, with herein petitioners Domingo

C. Evangelista, Jr., Leonardo Atienza Abad Santos and Conchita P. Navarro, the original

capitalist partners, remaining in that capacity, with a contribution of P17,500 each.

On December 17, 1963 herein respondent filed suit against the three other partners

alleging that the partnership, which was also made a party-defendant, had been paying

dividends to the partners except to her; and that notwithstanding her demands the

defendants had refused and continued to refuse and let her examine the partnership books

or to give her information regarding the partnership affairs to pay her any share in the

dividends declared by the partnership. She therefore prayed that the defendants be ordered

to render accounting to her of the partnership business and to pay her corresponding share

in the partnership profits after such accounting, plus attorney's fees and costs.

The defendants denied ever having declared dividends or distributed profits of the

partnership; denied likewise that the plaintiff ever demanded that she be allowed to

examine the partnership books; and byway of affirmative defense alleged that the amended

Articles of Co-partnership did not express the true agreement of the parties, which was that

the plaintiff was not an industrial partner; that she did not in fact contribute industry to

the partnership.

The CFI of Manila rendered a decision declaring Estrella as an industrial partner. The

court ordered the capitalist partners to render accounting of the business, to pay Estrella



21

her share in the profits and/or dividends and to pay for her legal costs. Petitioners

appealed before the CA, which affirmed the decision of the CFI.

Hence, this appeal before the SC assigning the following error, among others:

I. The CA erred in the finding that the respondent is an industrial partner notwithstanding

the admitted fact that since 1954 and until after promulgation of the decision of the

appellate court the said respondent was one of the judges of the City Court of Manila, and

despite its findings that respondent had been paid for services allegedly contributed by her

to the partnership. In this connection the Court of Appeals erred:

ISSUE:

Whether the respondent, who is a judge, can be considered as an industrial partner hence

having the right to be rendered an accounting and to see the books of accounts.

RULING:

Yes. Petitioners raised the issue that respondent cannot qualify as an industrial partner

because she is one of the judges of the City Court of Manila, this, devoting all hert ime to

the performance of the duties of her public office and that she could not lawfull y contribute

her full time and industry which is the obligation of an industrial partner pursuant to Art.

1789 of the Civil Code.

'ART. 1789. An industrial partner cannot engage in business for himself, unless the

partnership expressly permits him to do so; and if he should do so, the capitalist partners

may either exclude him from the firm or avail themselves of the benefits which he may

have obtained in violation of this provision, with a right to damages in either case.'

It is not disputed that the provision against the industrial partner engaging in business for

himself seeks to prevent any conflict of interest between the industrial partner and the

partnership, and to insure faithful compliance by said partner with this prestation. There is

no pretense, however, even on the part of the appellee is engaged in any business

antagonistic to that of appellant company, since being a Judge of one of the branches of the

City Court of Manila can hardly be characterized as a business. That appellee has faithfully

complied with her prestation with respect to appellants.

What has gone before persuades us to hold with the lower Court that appellee is an

industrial partner of appellant company, with the right to demand for a formal accounting

and to receive her share in the net profit that may result from such an accounting, which

right appellants take exception under their second assigned error. Our said holding is based

on the following article of the New Civil Code:

'ART. 1899. Any partner shall have the right to a formal account as to partnership affairs:

(1) If he is wrongfully excluded from the partnership business or possession of its

property by his co-partners;

(2) If the right exists under the terms of any agreement;

(3) As provided by article 1807;



22

(4) Whenever other circumstance render it just and reasonable.

MOBIL OIL PHILIPPINES, INC., V. COURT OF FIRST INSTANCE OF RIZAL, BRANCH VI, GEMINIANO F. YABUT AND AGUEDA ENRIQUEZ YABUT

G.R. No. 40457 May 8, 1992

FACTS:

On November 8, 1972, petitioner filed a complaint 1 in the Court of First Instance of Rizal

against the partnership La Mallorca and its general partners, which included private

respondents, for collection of a sum of money arising from gasoline purchased on credit but

not paid, for damages and attorney's fees.

In its petition to Modify Decsision and/or Reconsideration,private respondents allege that

one Miguel Enriquez, not being a general partner, could not bind the partnership in the Sales

Agreement he signed with plaintiff; And that GeminianoYabut already wothdrew as a

partner of of La Mallorca.

ISSUE:

Whether Miguel Enriquez can be considered as a general partner of La Mallorca and thus

bind the partnership.

RULING:

YES, Mr. Enriquez is considered as a general partner.

Mr. Miguel Enriquez automatically became a general partner of the partnership La Mallorca

being one of the heirs of the deceased partner Mariano Enriquez. Article IV of the uncontested

Articles of Co-Partnership of La Mallorca provides:

"IV. Partners. The parties above-named, with their civil status, citizenship and residences set forth after their respective names, shall be members comprising this

partnership, all of whom shall be general partners.

If during the existence of this co-partnership, any of the herein partners should die, the co-

partnership shall continue to exist amongst the surviving partners and the heir or heirs of

the deceased partner or partners; Provided, However, that if the heir or heirs of the deceased

partner or partners elect not to continue in the co-partnership, the surviving partners shall

have the right to acquire the interests of the deceased partner or partners at their book value

based upon the last balance sheet of the co-partnership, and in proportion to their respective

capital contributions; And, Provided Further, that should a partner or partners desire to

withdraw from the co-partnership and the remaining partners are not willing to acquire his



23

or their shares or interest in the co-partnership in accordance with the foregoing provisions,

the co-partnership shall not thereby be dissolved, but such retiring partner or partners shall

only be entitled to his or their shares in the assets of the co-partnership according to the

latest balance sheet which have been drawn prior to the date of his or their withdrawal. In

such event, the co-partnership shall continue amongst the remaining partners."

As to respondent Geminiano Yabut's claim that he cannot be liable as a partner, he having

withdrawn as such, does not convince Us. The debt was incurred long before his withdrawal

as partner and his resignation as President of La Mallorca on September 14, 1972.

Respondent Geminiano Yabut could not just withdraw unilaterally from the partnership to

avoid his liability as a general partner to third persons like the petitioner in the instant case.

This is likewise true with regard to the alleged non-active participation of respondent Agueda

Yabut in the partnership. Active participation in a partnership is not a condition precedent

for membership in a partnership so as to be entitled to its profits nor be burdened with its

liabilities.

SY JUCO V. CASTRO

GR No. 70403, July 7, 1989

FACTS:

Back in November 1964, Eugenio Lim, for and in his own behalf and as attorney-in-fact of

his mother, the widow Maria Moreno (now deceased) and of his brother Lorenzo, together

with his other brothers, Aramis, Mario and Paulino, and his sister, Nila, all hereinafter

collectively called the Lims, borrowed from petitioner Santiago Syjuco, Inc. (hereinafter,

Syjuco only) the sum of P800,000.00. The loan was given on the security of a first mortgage

on property registered in the names of said borrowers as owners in common under Transfer

Certificates of Title Numbered 75413 and 75415 of the Registry of Deeds of Manila.

Thereafter additional loans on the same security were obtained by the Lims from Syjuco, so

that as of May 8, 1967, the aggregate of the loans stood at P2,460,000.00, exclusive of interest,

and the security had been augmented by bringing into the mortgage other property, also

registered as owned pro indiviso by the Lims under two titles: TCT Nos. 75416 and 75418 of

the Manila Registry.

There is no dispute about these facts, nor about the additional circumstance that as

stipulated in the mortgage deed the obligation matured on November 8, 1967; that the Lims

failed to pay it despite demands therefor; that Syjuco consequently caused extra-judicial

proceedings for the foreclosure of the mortgage to be commenced by the Sheriff of Manila;

and that the latter scheduled the auction sale of the mortgaged property on December 27,

1968.

To prevent the execution of the judgment against them, a complaint was presented, not in

their individual names, but in the name of a partnership of which they themselves were the

only partners: "Heirs of Hugo Lim." The complaint advocated the theory that the mortgage



24

which they, together with their mother, had individually constituted (and thereafter

amended during the period from 1964 to 1967) over lands standing in their names in the

Property Registry as owners pro indiviso, in fact no longer belonged to them at that time,

having been earlier deeded over by them to the partnership, "Heirs of Hugo Lim", more

precisely, on March 30, 1959, hence, said mortgage was void because executed by them

without authority from the partnership.

ISSUE:

Whether the mortgage executed by the Lims be attributable to their partnership.

RULING:

YES. The mortgage executed by the Lims is attributable to their partnership.

The court held that the legal fiction of a separate juridical personality and existence will not

shield it from the conclusion of having such knowledge which naturally and irresistibly flows

from the undenied facts. It would violate all precepts of reason, ordinary experience and

common sense to propose that a partnership, as commonly known to all the partners or of

acts in which all of the latter, without exception, have taken part, where such matters or acts

affect property claimed as its own by said partnership.

If, therefore, the respondent partnership was inescapably chargeable with knowledge of the

mortgage executed by all the partners thereof, its silence and failure to impugn said mortgage

within a reasonable time, let alone a space of more than seventeen years, brought into play

the doctrine of estoppel to preclude any attempt to avoid the mortgage as allegedly

unauthorized.

Inaction or silence may under some circumstances amount to a misrepresentation and

concealment of the facts, so as to raise an equitable estoppel. When the silence is of such a

character and under such circumstances that it would become a fraud on the other party to

permit the party who has kept silent to deny what his silence has induced the other to believe

and act on, it will operate as an estoppel. This doctrine rests on the principle that if one

maintains silence, when in conscience he ought to speak, equity will debar him from speaking

when in conscience he ought to remain silent. He who remains silent when he ought to speak

cannot be heard to speak when he should be silent.

Equally or even more preclusive of the respondent partnership's claim to the mortgaged

property is the last paragraph of Article 1819 of the Civil Code, which contemplates a

situation duplicating the circumstances that attended the execution of the mortgage in favor

of Syjuco and therefore applies foursquare thereto. "Where the title to real property is in the

names of all the partners a conveyance executed by all the partners passes all their rights in

such property"

There is thus no reason to distinguish between the Lims, as individuals, and the partnership

itself, since the former constituted the entire membership of the latter. In other words,

despite the concealment of the existence of the partnership, for all intents and purposes and



25

consistently with the Lims' own theory, it was that partnership which was the real party in

interest in all the actions; it was actually represented in said actions by all the individual

members thereof, and consequently, those members' acts, declarations and omissions cannot

be deemed to be simply the individual acts of said members, but in fact and in law, those of

the partnership.

ROJAS V. MAGLANA GR. No. 30616; December 10, 1990

FACTS:

Maglana and Rojas executed their Articles of Co-Partnership called Eastcoast Development

Enterprises (EDE). It was a partnership with an indefinite term of existence. Maglana shall

manage the business affairs while Rojas shall be the logging superintendant and shall

manage the logging operation. They shall share in all profits and loss equally. Due to

difficulties encountered they decided to avail of the sources of Pahamatong as industrial

partners. They again executed their Articles of Co-Partnership under EDE. The term is 30

years. After sometime Pamahatong sold his interest to Maglana and Rojas including

equipment contributed. After withdrawal of Pamahatong, Maglana and Rojas continued the

partnership. After 3 months, Rojas entered into a management contract with another logging

enterprise. He left and abandoned the partnership. He even withdrew his equipment from

the partnership and was transferred to CMS. He never told Maglana that he will not be able

to comply with the promised contributions and he will not work as logging superintendent.

Maglana then told Rojas that the latter share will just be 20% of the net profits. Rojas took

funds from the partnership more than his contribution. Thus, Maglana notified Rojas that

he dissolved the partnership.

ISSUE:

What is the nature of the partnership and legal relationship of Maglana and Rojas after

Pahamatong retired from the second partnership?

RULING:

Under Article 1830, par. 2 of the Civil Code, even if there is a specified term, one partner can

cause its dissolution by expressly withdrawing even before the expiration of the period, with

or without justifiable cause. Of course, if the cause is not justified or no cause was given, the

withdrawing partner is liable for damages but in no case can he be compelled to remain in

the firm. With his withdrawal, the number of members is decreased, hence, the dissolution.

And in whatever way he may view the situation, the conclusion is inevitable that Rojas and

Maglana shall be guided in the liquidation of the partnership by the provisions of its duly

registered Articles of Co-Partnership; that is, all profits and losses of the partnership shall

be divided "share and share alike" between the partners.



26

But an accounting must first be made and which in fact was ordered by the trial court and

accomplished by the commissioners appointed for the purpose.It was not the intention of the

partners to dissolve the first partnership, upon the constitution of the second one, which they

unmistakably called additional agreement. Otherwise stated even during the existence of the second partnership, all business transactions were carried out under the duly registered

articles. No rights and obligations accrued in the name of the second partnership except in

favor of Pahamatong which was fully paid by the duly registered partnership.

YU VS NLRC GR. No. 97212; June 30, 1993

FACTS:

Benjamin Yu used to be the Assistant General Manager of Jade Mountain, a partnership

engaged in marble quarrying and export business. The majority of the founding partners

sold their interests in said partnership to Willy Co and Emmanuel Zapanta without Yus knowledge. Said new partnership continued operating under the same name and continued

the businesss operations. However, it transferred its main office from Makati to Mandaluyong. Said new partnership did not anymore availed of the services of Yu. Thus, he

filed a complaint for illegal dismissal, recovery of unpaid wages and damages.

ISSUE:

(1) Whether the partnership which had hired petitioner Yu as Assistant General Manager

had been extinguished and replaced by a new partnerships composed of Willy Co and

Emmanuel Zapanta; and (2) if indeed a new partnership had come into existence, whether

petitioner Yu could nonetheless assert his rights under his employment contract as against

the new partnership.

RULING :

we agree with the result reached by the NLRC, that is, that the legal effect of the changes in

the membership of the partnership was the dissolution of the old partnership which had hired

petitioner in 1984 and the emergence of a new firm composed of Willy Co and Emmanuel

Zapanta in 1987.

The applicable law in this connection of which the NLRC seemed quite unaware is found in the Civil Code provisions relating to partnerships. Article 1828 of the Civil Code provides

as follows:

Art. 1828. The dissolution of a partnership is the change in the relation of the partners

caused by any partner ceasing to be associated in the carrying on as distinguished from the



27

winding up of the business. (Emphasis supplied)

Article 1830 of the same Code must also be noted:

Art. 1830. Dissolution is caused:

(1) without violation of the agreement between the partners;

xxx xxx xxx

(b) by the express will of any partner, who must act in good faith, when no definite term

or particular undertaking is specified;

xxx xxx xxx

(2) in contravention of the agreement between the partners, where the circumstances do

not permit a dissolution under any other provision of this article, by the express will of any

partner at any time;

xxx xxx xxx

(Emphasis supplied)

In the case at bar, just about all of the partners had sold their partnership interests

(amounting to 82% of the total partnership interest) to Mr. Willy Co and Emmanuel Zapanta.

The record does not show what happened to the remaining 18% of the original partnership

interest. The acquisition of 82% of the partnership interest by new partners, coupled with

the retirement or withdrawal of the partners who had originally owned such 82% interest,

was enough to constitute a new partnership.

The occurrence of events which precipitate the legal consequence of dissolution of a

partnership do not, however, automatically result in the termination of the legal personality

of the old partnership. Article 1829 of the Civil Code states that:

[o]n dissolution the partnership is not terminated, but continues until the winding up of

partnership affairs is completed.

In the ordinary course of events, the legal personality of the expiring partnership persists for

the limited purpose of winding up and closing of the affairs of the partnership. In the case at

bar, it is important to underscore the fact that the business of the old partnership was simply

continued by the new partners, without the old partnership undergoing the procedures

relating to dissolution and winding up of its business affairs. In other words, the new

partnership simply took over the business enterprise owned by the preceeding partnership,

and continued using the old name of Jade Mountain Products Company Limited, without

winding up the business affairs of the old partnership, paying off its debts, liquidating and

distributing its net assets, and then re-assembling the said assets or most of them and

opening a new business enterprise. There were, no doubt, powerful tax considerations which

underlay such an informal approach to business on the part of the retiring and the incoming

partners. It is not, however, necessary to inquire into such matters.



28

What is important for present purposes is that, under the above described situation, not only

the retiring partners (Rhodora Bendal, et al.) but also the new partnership itself which

continued the business of the old, dissolved, one, are liable for the debts of the preceding

partnership.The legal effect of the changes in the membership of the partnership was the

dissolution of the old partnership which had hired Yu in 1984 and the emergence of a new

firm composed of Willy Co and Emmanuel Zapanta in 1987. The new partnership simply took

over the business enterprise owned by the preceeding partnership, and continued using the

old name of Jade Mountain Products Company Limited, without winding up the business

affairs of the old partnership, paying off its debts, liquidating and distributing its net assets,

and then re-assembling the said assets or most of them and opening a new business

enterprise. Not only the retiring partners but also the new partnership itself which continued

the business of the old, dissolved, one, are liable for the debts of the preceding partnership.

ORTEGA VS COURT OF APPEALS GR. No. 109248; July 3, 1995

FACTS:

The Respondent was a Senior Partner of BITO, MIZA and LOZADA. The said law is

composed of Joaquin Miza, Jesus Bito and Mariano Lozada as senior partners and Gregorio

Ortega, Tomas Del Castillo and Benjamin Bacorro as Junior Partners. Such firm was duly

registered in the Mercantile Registry since 1937 and again registered with the Securities and

Exchange Commission on 1948. The record shows that there were several subsequent

amendments to the articles of partnership since the firm name was changed six (6) times

from 1958 to 1977.

Meanwhile, Atty. Joaquin Miza withdraw from the firm and reasons out that the Partnership

already ceased to be mutually satisfactory because of the working conditions of the employees

including the Assistant Attorneys. He filed to the SEC a petition for dissolution and

liquidation of the Partnership.

On 1989, the hearing officer rendered decision ruling that the withdrawal of Atty Misa did

not dissolve the law partnership.

On appeal, the SEC en banc reversed the decision of the Hearing Officer and held the

withdrawal had dissolved the Partnership. The Commission ruled that, being a partnership

at will, the Law Firm could be dissolved by any partner at any time regardless of good faith

or bad faith, since no partner can be forced to continue partnership against his will.

Reconsideration was sought by the parties and Atty. Misa. In addition, asked for an

appointment of receivership. Respondent SEC denied the Reconsideration. Afterwards, the

parties filed their separate appeals.



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During the pendency of the case, Atty Bito and Atty Lozada both died. The CA decision

affirmed in toto the SEC division and denied the appointment of receivership.

ISSUES:

1) Is the Partnership a Partnership at will; and

2) Did the withdrawal of Atty. Misa dissolve the Partnership regardless of good and bad

faith.

RULING:

1) A Partnership which does not fix its term is a Partnership at will. Accordingly, the said

partnership is a partnership at will as the partnership agreements states that: the partnership shall continue as long as there is mutually satisfactory and upon death or legal

incapacity of the parties.

2) The birth of a Partnership at will is predicated on the mutual desire and consent of the

partners. The right to choose with whom a person wishes to associate himself is the very

foundation and essence of a Partnership. Its continued existence is, in turn, dependent on

the mutual resolve of the Partnerss capability and the absence of causes of dissolution of the partnership at will. However, such partner who wishes to dissolve the partnership must act

in good faith. Attendance of bad faith may hinder dissolution and render damage to the said

partner.

Among others, mutual agency arises and the doctrine of delectus personae allows them to

have the power to dissolve the partnership. An unjustified dissolution by the Partner can

subject him to damages.

PIONEER INSURANCE VS COURT OF APPEALS GR. No. 84197; July 28, 1989

FACTS:

Jacob S. Lim is the owner-operator of Southern Airlines (SAL), a single proprietorship

company. Meanwhile, Japan Domestic Airlines (JDA) and Lim entered into a sales contract.

Pioneer Insurance and Surety Corporation executed its surety bond in favor of JDA on behalf

of its principal Lim Border Machinery and Heacy Equipment Co, Inc. Francisco and Modesto

Cervantes, and Constancio Maglana contributed funds based on the misrepresentation of

Lim that they will form a new corporation to expand his business. They executed two separate

indemnity agreements in favor of Pioneer, one signed by Maglana and the other jointly

signed by Lim for SAL Bormaheco and the Cervanteses the indemnity agreement stipulated

that the indemnitors principally agree and bind themselves jointly and severally to indemnify

and hold and save Pioneer from and against any/all damages, losses, etc. Of whatever kind

and nature may incur in consequence of having become surety.



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Lim executed in favor of pioneer deed of chattel mortgage as security. Upon default on the

payments, Pioneer paid for him and filed a petition for the foreclosure of chattel mortgage as

security Maglana, Bormaheco and the Cervantess filled cross-claims against Lim alleging that they were not privies to the contract signed by Lim and for recovery of the sum of money

they advanced to Lim for the purchases of the aircraft. The decision was rendered holding

Lim liable to pay.

ISSUE:

1. Does Pioneer Insurance have a cause of action against respondent?

2. Does failure to incorporate automatically result in de facto partnership?

RULING:

1. Pioneer has no right institute and maintain in its own name an action for the benefit of

the reinsurers, it is well-settled that an action brought by the attorney in fact in his own

name instead of that of the principal will not prosper, and this is so even where the name of

the principal is disclosed in the complaint. An attorney in fact is not real party in interest,

that there is no law permitting an action to be brought by an attorney in fact.

2. NO. Partnership inter se does not necessarily exist, for ordinary persons cannot be made

to assume the relation of partners as between themselves, when their purpose is that no

partnership shall exist and it should be implied only when necessary to do justice between

the parties; thus, one who takes no part except to subscribe for stock in a proposed corporation

which is never legally formed does not become a partner with other subscribers who engage in

business under the name of the pretended corporation, so as to be liable as such in an action

for settlement of the alleged partnership and contribution.

CARMEN LIWANAG VS. THE HON. COURT OF APPEALS AND THE PEOPLE OF THE PHILIPPINES

G.R. No. 114398 October 24, 1997

FACTS:

Petitioner Carmen Liwanag (Liwanag) and a certain Thelma Tabligan went to the house of

complainant Isidora Rosales (Rosales) and asked her to join them in the business of buying

and selling cigarettes. Convinced of the feasibility of the venture, Rosales readily agreed.

Under their agreement, Rosales would give the money needed to buy the cigarettes while

Liwanag and Tabligan would act as her agents, with a corresponding 40% commission to her

if the goods are sold; otherwise the money would be returned to Rosales. Consequently,

Rosales gave several cash advances to Liwanag and Tabligan amounting to P633,650.00.

At first, Liwanag visits Rosales every now and then to update her of the business. However,



31

after a few updates, Liwanag was nowhere to be found. Rosales filed an estafa case against

Liwanag.

Liwanag argues that their business is a partnership agreement. Thus, the failure to return

the money gives rise only to a civil liability.

ISSUE:

Whether or not a partnership exists

RULING:

No. The language of the receipt could not be any clearer. It indicates that the money delivered

to Liwanag was for a specific purpose, that is, for the purchase of cigarettes, and in the event

the cigarettes cannot be sold, the money must be returned to Rosales.

Thus, even assuming that a contract of partnership was indeed entered into by and between

the parties, we have ruled that when money or property have been received by a partner for

a specific purpose (such as that obtaining in the instant case) and he later misappropriated

it, such partner is guilty of estafa.

CHOITHRAM JETHMAL RAMNANI AND/OR NIRMLA V. RAMNANI AND MOTI G. RAMNANI VS. COURT OF APPEALS, SPOUSES ISHWAR JETHMAL RAMNANI, SONYA JETHMAL RAMNANI AND OVERSEAS HOLDING CO., LTD., G.R. No. 85494 May 7, 1991

FACTS:

Choithram and Ishwar are brothers. Since Ishwar is residing in New York, he appointed

Choithram as his attorney-in-fact in order to manage their properties in the Philippines.

Choithram bought 2 parcels of land from Ortigas & Co., Ltd and erected a building using the

money sent by Ishwar. The properties are now valued at no less than P22,304,000.00 due to

the efforts of Choithram. Later on, Ishwar revoked his general power of attorney to

Choithram. The latter, outraged, assigned his power of attorney to his daughter in law

Nirmla Ramnani without informing Ortigas. Thus, upon full payment of the land, the title

was named in favor of Nirmla.

Ishwar sought to recover all of his properties.

ISSUE:

Whether or not he can recover all his properties



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RULING:

NO. Nevertheless, under the peculiar circumstances of this case and despite the fact that

Choithram, et al., have committed acts which demonstrate their bad faith and scheme to

defraud spouses Ishwar and Sonya of their rightful share in the properties in litigation, the

Court cannot ignore the fact that Choithram must have been motivated by a strong conviction

that as the industrial partner in the acquisition of said assets he has as much claim to said

properties as Ishwar, the capitalist partner in the joint venture.

We have a situation where two brothers engaged in a business venture. One furnished the

capital, the other contributed his industry and talent. Justice and equity dictate that the two

share equally the fruit of their joint investment and efforts. Perhaps this Solomonic solution

may pave the way towards their reconciliation. Both would stand to gain. No one would end

up the loser. After all, blood is thicker than water.

SUNGA-CHAN V. CHUA GR. No. 143340; August 15, 2001

FACTS:

Lamberto Chua alleged that in 1977, he verbally entered into a p

civ2 case digest 4d

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