Solis v. Barroso G.R. No.

L-27939

October 30, 1928

Facts:
The spouses Juan Lambino and Maria A. Barroso begot three children named
Alejo, Eugenia and Marciana Lambino. On June 2, 1919 said spouses made a
donation of propter nuptias of the lands described in the complaint in favor
of their son Alejo Lambino and Fortunata Solis in a private document (Exhibit
A) in consideration of the marriage which the latter were about to enter into.
One of the conditions of this donation is that in case of the death of one of
the donees, one-half of these lands thus donated would revert to the donors
while the surviving donee would retain the other half. On the 8th of the said
month of June 1919, Alejo Lambino and Fortunata Solis were married and
immediately thereafter the donors delivered the possession of the donated
lands to them. On August 3, 1919 donee Alejo Lambino died. In the same
year donor Juan Lambino also died. After the latter's death, his wife, Maxima
Barroso, recovered possession of the donated lands.
The spouses J. Lambino and M. Barroso made a donation of propter nuptias
in favor of their son A. Lambino and her future spouse F. Solis. As a condition
to the donation, it was stated that in case of the death of one of the donees,
the one-half of the donated land shall be reverted back to the donors.
A.Lambino and F. Solis got married in 1919. Thus, the donors delivered the
possession of the lands in favor of the said spouses. Later on, A. Lambino
died. Hence, M. Barroso moved for the recovery of the possession of the
donated land.
The surviving spouse, F. Solis, filed an action against the heirs of the
deceased J. Lambino to proceed with the partition and to execute the proper
deed of donation by transferring the other half of the subject property. The
court rendered a decision based on Article 1279 of the Civil Code granting
plaintiffs prayer.
Hence, this petition before the Supreme Court.
Issue:
Whether or not Article 1279 of Civil Code is applicable to this case.
Ruling: No. Article 1279 is not applicable in this case.
We are of the opinion that article 1279 of the Civil Code, relating to
contracts, is not applicable to the present case.
Art. 1773. A contract of partnership is void, whenever immovable property
is contributed thereto, if an inventory of said property is not made, signed by
the parties, and attached to the public instrument. (1668a)

Art. 1279. In order that compensation may be proper, it is

necessary:
(1) That each one of the obligors be bound principally, and that
he be at the same time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things
due are consumable, they be of the same kind, and also of the
same quality if the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or
controversy, commenced by third persons and communicated
in due time to the debtor.1aw
We have, therefore, a donation propter nuptias which is not valid and
did not create any right, since it was not made in a public instrument,
and hence, article 1279 of the Civil Code which the lower court applied
is not applicable thereto. The last named article provides that, should
the law require the execution of an instrument or any other special
form in order to make the obligations of a contract effective, the
contracting parties may compel each other to comply with such
formality from the moment that consent has been given, and the other
requirements for the validity of the contract exist. Suffice it to state
that this article refers to contracts and is inapplicable to the donation
in question, which must be governed by the rules on donations. It may
further be noted, at first sight, that this article presupposes the
existence of a valid contract and cannot possibly refer to the form
required in order to make it valid, which it already has, but rather to
that required simply to make it effective, and for this reason, it would,
at all events, be inapplicable to the donation in question, wherein the
form is required precisely to make it valid.
Torres v. Court of Appeals [G.R. No. 134559. December 9, 1999]
Facts:
The petitioners entered into a joint venture agreement with the
respondent for the development of a parcel of land into a subdivision. All the
parties agreed to share the proceeds from the sale of the subdivided lots.
Unfortunately, the project failed to materialized, and was subsequently
foreclosed by a bank. The petitioner alleged that the failed project is
attributable to the respondent due to his lack of means and skills. However,
the respondent contended that he performed the necessary works therein,
but it were the respondents who had cause the failure of the project.

Petitioner then filed a complaint against the respondent before the RTC
but it was dismissed. Thus, the petitioner sought an appeal before the Court
of Appeals. In its resolution, it was declared that the competing parties had
formed a partnership for the development of the subdivision. Consequently,
the applicable rule is Article 1797.
Issue: Whether or not there is a partnership between the Torres Sisters and
the Respondent.
Ruling: Yes. There is partnership.
That the terms of a contract turn out to be financially disadvantageous
to them will not relieve them of their obligations therein. The lack of an
inventory of real property will not ipso facto release the contracting partners
from their respective obligations to each other arising from acts executed in
accordance with their agreement.
ART. 1767. 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.
Under the above-quoted Agreement, petitioners would contribute
property to the partnership in the form of land which was to be developed
into a subdivision; while respondent would give, in addition to his industry,
the amount needed for general expenses and other costs. Furthermore, the
income from the said project would be divided according to the stipulated
percentage. Clearly, the contract manifested the intention of the parties to
form a partnership
Respondents actions clearly belie petitioners contention that he made no
contribution to the partnership. Under Article 1767 of the Civil Code, a
partner may contribute not only money or property, but also industry.
Petitioners argue that the Joint Venture Agreement is void under Article 1773
of the Civil Code
ART. 1773. A contract of partnership is void, whenever immovable property is
contributed thereto, if an inventory of said property is not made, signed by
the parties, and attached to the public instrument.
They contend that since the parties did not make, sign or attach to the
public instrument an inventory of the real property contributed, the
partnership is void.

We clarify. First, Article 1773 was intended primarily to protect third

persons. Thus, the eminent Arturo M. Tolentino states that under the
aforecited provision which is a complement of Article 1771,the execution of a
public instrument would be useless if there is no inventory of the property
contributed, because without its designation and description, they cannot be
subject to inscription in the Registry of Property, and their contribution
cannot prejudice third persons. This will result in fraud to those who contract
with the partnership in the belief [in] the efficacy of the guaranty in which
the immovables may consist. Thus, the contract is declared void by the law
when no such inventory is made. The case at bar does not involve third
parties who may be prejudiced.
Second, petitioners themselves invoke the allegedly void contract as
basis for their claim that respondent should pay them 60 percent of the
value of the property. They cannot in one breath deny the contract and in
another recognize it, depending on what momentarily suits their
purpose. Parties cannot adopt inconsistent positions in regard to a contract
and courts will not tolerate, much less approve, such practice.
Partnership Agreement Not the Result of an Earlier Illegal Contract

Petitioners also contend that the Joint Venture Agreement is void under
Article 1422 of the Civil Code, because it is the direct result of an earlier
illegal contract, which was for the sale of the land without valid
consideration.
This argument is puerile. 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.

Smith v. Lopez G.R. No. 1472

September 30, 1905

Facts:
Smith and Reyes filed an action against the Lopez Sisters to recover a
sum of money, with interest, for the work performed in the house of the
latter.

In its defense, the Lopez Sisters, thru the representation of their

counsel, denied all the facts in the complaint. Further, they prayed for the
dismissal of the case and alleged that the plaintiffs did not have entered into
a mercantile partnership, nor it would constitute a legal partnership; by the
reason that the father of the Lopez Sisters was not empowered to enter into
any contracts.
The CFI rendered a judgement in favor of Smith and Reyes. Hence, this
appeal before the Supreme Court.
Issue:
Whether or not there is partnership between Smith and Reyes.
Whether or not Smith and Reyes is required to register under the
Mercantile Registry.
Ruling: No. There is no partnership between Smith and Reyes, hence they
are not required to register under the Mercantile Registry.
There was no such error. Messrs. Smith and Reyes executed the contract
in their own individual capacity and not in the name of any partnership. They
acted as coowners of the Philippine Gas Light Company. In their complaint
they sought to enforce a legitimate right which they had as such coowners
The plaintiffs were not seeking to enforce a right pertaining to a legal
entity. They were not obliged to register in the Mercantile Registry. They were
merely merchants having a common interest in the business. They were
under no obligation to register.
As to the second, third, and fourth errors, it must be borne in mind that
Nicasio Lopez, the father of the defendants, was the administrator of the
property; that having been notified of an order of the Board of Health he took
the necessary steps to comply with the same, calling upon one of the
plaintiffs to do the work required, and that he made certain payments on
account. He, the father of the defendants, did all this as a voluntary agent of
the actual owners of the house, and, although there is no proof of an express
power of attorney, it can not be denied that there was an implied power,
because the defendants did not object to the work being done on the house,
which was really benefited and improved by such work. For this reason it is
evidently just that the owners be held liable for the cost of the work and the
value of the material used therein. They can not now allege that there was
no contract and that they did not agree to pay for such labor and material.

There was a quasi contract which created certain reciprocal obligations

between them and the plaintiffs.
Furthermore, if the work had not been done as required by the Board of
Health, it would have been to the disadvantage of the defendants because
the work would have been eventually undertaken by the authorities and at
the expense of the said defendants.
For this reason, which is a perfectly legal one, a judgment against the
defendants in this case enforcing the obligation incurred by them under
article 1893 of the Civil Code would be of no effect as to the successors or
heirs of the deceased Vicente F. Cruz, but a separate action must be
commenced against such successors or legal heirs. It would not be just or
proper that the defendants should pay the whole amount of the claim but
only one-half thereof, since they only owned half of the house wherein the
work was done; the recovery of the cost of such work being the subjectmatter of this action.

G.R. No. L-35469

March 17, 1932

E. S. LYONS, plaintiff-appellant,
vs.
C. W. ROSENSTOCK, Executor of the Estate of Henry W. Elser,
deceased, defendant-appellee.
Facts:
This is an action filed by Lyons against the executor of the Estate of
Elswer to recover four hundred forty-six and two thirds shares of stock of J.K.
Pickering & Co. together with the sum of about P125,000, representing the
dividends, including its interest.
On an earlier date, Elser and Lyons were engaged into a profiting realestate business. In fact, Elser made written statements showing that Lyons
was a co-owner with him on three particular real properties. Consequently,
Lyons issued a general power of attorney in favor Elser for the management
and disposal of these properties. Thereafter, two of the properties were sold
by Elser.
Meanwhile, Elser bought a property, herein referred as the San Juan
Estate, amounting to P150,000. Part of the funds used by Elser in

purchasing the San Juan Estate was borrowed from Uy Siuliong, as

guaranteed by the Fidelity & Surety, Co. At first, the property which was coowned by Lyons and Elser were included as a security to the loan, but later
on it was amended by Elser, as he offered another property and certain
shares of stocks.
However, Lyons thought that his co-owned property was sold for the
acquisition of the San Juan Estate; his bone of contention was based this
premise.
The trial court rendered a decision in favor of the Estate of Elser.
Hence, Lyons appealed his case before the Supreme Court.
Issue:
Whether or not Lyson is entitled to recover the sum of properties involved
therein by virtue of his partnership with Elser.
Ruling: No he is not entitled. There is no partnership between Lyons and
Elser.
In the purely legal aspect of the case, the position of the appellant is, in our
opinion, untenable. If Elser had used any money actually belonging to Lyons
in this deal, he would under article 1724 of the Civil Code and article 264 of
the Code of Commerce, be obligated to pay interest upon the money so
applied to his own use. Under the law prevailing in this jurisdiction a trust
does not ordinarily attach with respect to property acquired by a person who
uses money belonging to another (Martinez vs. Martinez, 1 Phil., 647;
Enriquez vs. Olaguer, 25 Phil., 641.). Of course, if an actual relation of
partnership had existed in the money used, the case might be difference;
and much emphasis is laid in the appellant's brief upon the relation of
partnership which, it is claimed, existed. But there was clearly no general
relation of partnership, under article 1678 of the Civil Code. It is clear that
Elser, in buying the San Juan Estate, was not acting for any partnership
composed of himself and Lyons, and the law cannot be distorted into a
proposition which would make Lyons a participant in this deal contrary to his
express determination.
The doctrines referred to operate, however, only where money belonging to
one person is used by another for the acquisition of property which should
belong to both; and it takes but little discernment to see that the situation
here involved is not one for the application of that doctrine, for no money
belonging to Lyons or any partnership composed of Elser and Lyons was in

fact used by Elser in the purchase of the San Juan Estate. Of course, if any
damage had been caused to Lyons by the placing of the mortgage upon the
equity of redemption in the Carriedo property, Elser's estate would be liable
for such damage. But it is evident that Lyons was not prejudice by that act.
Ortega v. Court of Appeals
G.R. No. 109248 July 3, 1995
GREGORIO F. ORTEGA, TOMAS O. DEL CASTILLO, JR., and BENJAMIN T.
BACORRO, petitioners,
vs.
HON. COURT OF APPEALS, SECURITIES AND EXCHANGE COMMISSION
and JOAQUIN L. MISA,
Facts:
The law firm of Ross, Lawrence, Selph and Carrascoso was duly
registered in the Mercantile Registry and reconstituted with the Securities
and Exchange Commission.
The petitioner (Atty. Misa) wrote a letter to the respondents that he
intends to retire from the firm of Bito, Misa, and Lozada and that he wishes to
resolve the liquidation to his participation in the firm. Thereafter, he filed a
petition for dissolution and liquidation of partnership with the SEC. The
officer ruled that the partnership was not dissolved.
On appeal, the SEC reversed and held that the withdrawal of Atty. Misa
had dissolved the partnership. Hence, the aggrieved parties sought an
appeal before the Court of Appeals. During the pendency of the case in the
said court, two of the partners died, thus it paved way for the admission of
new partners.
Not long after, the CA rendered a decision and it affirmed in toto the
decision of the SEC. Ratiocinating that being a partnership at will, the law
firm could be dissolved by any partner at anytime, such as by his withdrawal
therefrom, regardless of good faith or bad faith, since no partner can be
forced to continue in the partnership against his will. Hence, this appeal.

Issue:

Whether or not the partnership of Bito, Misa and Lozada is a partnership at

will.
Whether or not the Atty. Misa acted in bad faith when he withdrew in the
partnership.
Ruling:
Yes. The partnership is a partnership at will.
The partnership agreement (amended articles of 19 August 1948) does not
provide for a specified period or undertaking. The "DURATION" clause simply
states: The partnership shall continue so long as mutually satisfactory and
upon the death or legal incapacity of one of the partners, shall be continued
by the surviving partners.
The birth and life 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 that partnership.
Its continued existence is, in turn, dependent on the constancy of that
mutual resolve, along with each partner's capability to give it, and the
absence of a cause for dissolution provided by the law itself. Verily, any one
of the partners may, at his sole pleasure, dictate a dissolution of the
partnership at will. He must, however, act in good faith, not that the
attendance of bad faith can prevent the dissolution of the partnership 4 but
that it can result in a liability for damages.
In passing, neither would the presence of a period for its specific duration or
the statement of a particular purpose for its creation prevent the dissolution
of any partnership by an act or will of a partner. 6 Among partners, 7 mutual
agency arises and the doctrine of delectus personae allows them to have
the power, although not necessarily the right, to dissolve the partnership. An
unjustified dissolution by the partner can subject him to a possible action for
damages.
The dissolution of a partnership is the change in the relation of the parties
caused by any partner ceasing to be associated in the carrying on, as might
be distinguished from the winding up of, the business. 8 Upon its dissolution,
the partnership continues and its legal personality is retained until the
complete winding up of its business culminating in its termination.
Atty. Misa did not act in bad faith

We accord due respect to the appellate court and respondent Commission on

their common factual finding, i.e., that Attorney Misa did not act in bad faith.
Public respondents viewed his withdrawal to have been spurred by
"interpersonal conflict" among the partners. It would not be right, we agree,
to let any of the partners remain in the partnership under such an
atmosphere of animosity; certainly, not against their will. 12Indeed, for as
long as the reason for withdrawal of a partner is not contrary to the dictates
of justice and fairness, nor for the purpose of unduly visiting harm and
damage upon the partnership, bad faith cannot be said to characterize the
act. Bad faith, in the context here used, is no different from its normal
concept of a conscious and intentional design to do a wrongful act for a
dishonest purpose or moral obliquity.

Uy v. Puzon G.R. No. L-19819 October 26, 1977

Facts:
Puzon, the respondent, entered a contract with the Republic of the
Philippines for the construction of roads and bridges. But due to the financial
reverses, he entered to a partnership with Uy, the plaintiff. In their
agreement, both agreed to contribute a certain amount of money to the
partnership.

Thereafter, he seek financial assistance to Uy, the plaintiff, which paved the
way for the creation of a partnership between them. It was agreed that each
of them shall contribute P50, 000.00 as the capital of their partnership. But,
due to financial reverses of the respondent, the plaintiff advanced a P10,
000.00 in behalf of the former.

This is an appeal to the decision of the CFI of Manila in dissolving the U.P.
Construction Company.

G.R. No. L-19819 October 26, 1977

WILLIAM UY, plaintiff-appellee,
vs.
BARTOLOME PUZON, substituted by FRANCO PUZON, defendantappellant.