THIRDDIVISION

G.R.NOS.166299300
AURELIOK.LITONJUA,JR.,

Petitioner,

versus
Present:

EDUARDOK.LITONJUA,SR.,

ROBERTT.YANG,ANGLO
PANGANIBAN,J.,Chairman
PHILS.MARITIME,INC.,
SANDOVALGUTIERREZ,
CINEPLEX,INC.,DDM
CORONA,
GARMENTS,INC.,EDDIEK.
CARPIOMORALESand
LITONJUASHIPPINGAGENCY,
GARCIA,JJ.
INC.,EDDIEK.LITONJUA

SHIPPINGCO.,INC.,LITONJUA
SECURITIES,INC.(formerlyE. Promulgated:
K.LitonjuaSec),LUNETA

THEATER,INC.,E&LREALTY,
(formerlyE&LINTLSHIPPING December13,2005
CORP.),FNPCO.,INC.,HOME
ENTERPRISES,INC.,
BEAUMONTDEV.REALTYCO.,
INC.,GLOEDLANDCORP.,
EQUITYTRADINGCO.,INC.,3D
CORP.,LDEV.CORP,LCM
THEATRICALENTERPRISES,
INC.,LITONJUASHIPPINGCO.
INC.,MACOILINC.,ODEON
REALTYCORP.,SARATOGA
REALTY,INC.,ACTTHEATER
INC.(formerlyGeneral
Theatrical&FilmExchange,
INC.),AVENUEREALTY,INC.,
AVENUETHEATER,INC.and
LVFPHILIPPINES,INC.,
(FormerlyVFPHILIPPINES),
Respondents.
xx

DECISION

GARCIA,J.:

In this petition for review under Rule 45 of the Rules of Court, petitioner Aurelio K.
Litonjua, Jr. seeks to nullify and set aside the Decision of the Court of Appeals (CA)
[1]
datedMarch31,2004 inconsolidatedcases C.A.G.R.Sp.No.76987and C.A.G.R.
[2]
SP. No 78774 and its Resolution dated December 07, 2004, denying petitioners
motionforreconsideration.

Therecourseiscastagainstthefollowingfactualbackdrop:

PetitionerAurelioK.Litonjua,Jr.(Aurelio)andhereinrespondentEduardoK.Litonjua,
Sr. (Eduardo) are brothers. The legal dispute between them started when, on
December 4, 2002, in the Regional Trial Court (RTC) at Pasig City, Aurelio filed a suit
againsthisbrotherEduardoandhereinrespondentRobertT.Yang(Yang)andseveral
[3]
corporationsforspecificperformanceandaccounting.Inhiscomplaint, docketedas
[4]
CivilCaseNo.69235andeventuallyraffledtoBranch68ofthecourt, Aurelioalleged
that, since June 1973, he and Eduardo are into a joint venture/partnership
arrangement in the Odeon Theater business which had expanded thru investment in
Cineplex, Inc., LCM Theatrical Enterprises, Odeon Realty Corporation (operator of
Odeon I and II theatres), Avenue Realty, Inc., owner of lands and buildings, among
other corporations. Yang is described in the complaint as petitioners and Eduardos
[5]
partnerintheirOdeonTheaterinvestment. Thesamecomplaintalsocontainedthe
followingmaterialaverments:
3.01Onorabout22June1973,[Aurelio]andEduardoenteredintoajointventure/partnershipfor
thecontinuationoftheirfamilybusinessandcommonfamilyfunds.

3.01.1Thisjointventure/[partnership]agreementwascontainedinamemorandumaddressedby
Eduardotohissiblings,parentsandotherrelatives.Copyofthismemorandumisattachedhereto
andmadeanintegralpartasAnnexAandtheportionreferringto[Aurelio]submarkedasAnnex
A1.

3.02Itwasthenagreeduponbetween[Aurelio]andEduardothatinconsiderationof[Aurelios]
retaininghisshareintheremainingfamilybusinesses(mostly,movietheaters,shippingandland
development) and contributing his industry to the continued operation of these businesses,
[Aurelio] will be given P1 Million or 10% equity in all these businesses and those to be
subsequentlyacquiredbythemwhicheverisgreater....

4.01from22June1973toaboutAugust2001,or[in]aspanof28years,[Aurelio]andEduardo
hadaccumulatedintheirjointventure/partnershipvariousassetsincludingbutnotlimitedtothe
corporatedefendantsand[their]respectiveassets.

4.02 In addition . . . the joint venture/partnership had also acquired [various other assets], but
Eduardocausedtoberegisteredinthenamesofotherparties.

xxxxxxxxx

4.04Thesubstantialassetsofmostofthecorporatedefendantsconsistofrealproperties.Alistof
someoftheserealpropertiesisattachedheretoandmadeanintegralpartasAnnexB.
xxxxxxxxx

5.02 Sometime in 1992, the relations between [Aurelio] and Eduardo became sour so that
[Aurelio]requestedforanaccountingandliquidationofhisshareinthejointventure/partnership
[butthesedemandsforcompleteaccountingandliquidationwerenotheeded].

xxxxxxxxx

5.05Whatisworse,[Aurelio]hasreasonablecausetobelievethatEduardoand/orthecorporate
defendants as well as Bobby [Yang], are transferring . . . various real properties of the
corporations belonging to the joint venture/partnership to other parties in fraud of [Aurelio]. In
consequence,[Aurelio]isthereforecausingatthistimetheannotationonthetitlesofthesereal
propertiesanoticeoflispendens.(Emphasisintheoriginalunderscoringandwordsinbracket
added.)

For ease of reference, Annex A1 of the complaint, which petitioner asserts to have
beenmeantforhimbyhisbrotherEduardo,pertinentlyreads:

10)JR.(AKL)[ReferringtopetitionerAurelioK.Litonjua]:

Youhavenowyourownlifetoliveafterhavingbeenmarried..

IamtryingmybesttomoldyouthewayIworksoyoucanfollowthepattern.Youwillbethe
onlyoneleftwiththecompany,amongusbrothersandIwillaskyoutostayasIwantyoutorun
thisofficeeverytimeIamaway.IwantyoutorunitthewayIamtryingtorunitbecauseIwill
beallaloneandIwilldependentirelytoyou(sic).Mysonswillnotbereadytohelpmeyetuntil
aboutmaybe15/20yearsfromnow.Whateverisleftinthecorporation,Iwillmakesurethatyou
get ONE MILLION PESOS (P1,000,000.00) or ten percent (10%) equity, whichever is greater.
WetwowillgamblethewholethingofwhatIhaveandwhatyouareentitledto..Itwillbeyou
andmealoneonthis.IfeverIpassaway,Iwantyoutotakecareofallofthis.Youkeepmyshare
formytwosonsarereadytakeoverbutgivethemthechancetorunthecompanywhichIhave
built.

xxxxxxxxx

Because you will need a place to stay, I will arrange to give you first ONE HUNDRED
THOUSANDS PESOS: (P100, 000.00) in cash or asset, like Lt. Artiaga so you can live better
there.TherestIwillgiveyouinformofstockswhichyoucankeep.ThisstockIassureyouis
goodandsaleable.IwillalsogladlygiveyoutheshareofWackWackandValleyGolfbecause
you have been good. The rest will be in stocks from all the corporations which I repeat, ten
[6]
percent(10%)equity.

OnDecember20,2002,Eduardoandthecorporaterespondents,asdefendants aquo,
filed a joint ANSWER With Compulsory Counterclaim denying under oath the material
allegationsofthecomplaint,moreparticularlythatportionthereofdepictingpetitioner
andEduardoashavingenteredintoacontractofpartnership.Asaffirmativedefenses,
Eduardo, et al., apart from raising a jurisdictional matter, alleged that the complaint
statesnocauseofaction,sincenocauseofactionmaybederivedfromtheactionable
document, i.e., Annex A1, being void under the terms of Article 1767 in relation to
Article 1773 of the Civil Code, infra. It is further alleged that whatever undertaking
Eduardoagreedtodo,ifany,underAnnexA1,areunenforceableundertheprovisions
[7]
oftheStatuteofFrauds.

For his part, Yang who was served with summons long after the other defendants
submitted their answer moved to dismiss on the ground, inter alia, that, as to him,
[8]
petitioner has no cause of action and the complaint does not state any. Petitioner
opposedthismotiontodismiss.

On January 10, 2003, Eduardo, et al., filed a Motion to Resolve Affirmative Defenses.

[9]

Tothismotion,petitionerinterposedan OppositionwithexParteMotiontoSetthe
[10]
CaseforPretrial.

Actingontheseparatemotionsimmediatelyadvertedtoabove,thetrialcourt,in
an Omnibus Order dated March 5, 2003, denied the affirmative defenses and, except
[11]
forYang,setthecaseforpretrialonApril10,2003.

InanotherOmnibusOrderofApril2,2003,thesamecourtdeniedthemotionof
[12]
Eduardo, et al., for reconsideration
and Yangs motion to dismiss. The following
thentranspiredinsofarasYangisconcerned:

1.OnApril14,2003,YangfiledhisANSWER,butexpresslyreservedtherighttoseekreconsiderationof
[13]
theApril2,2003OmnibusOrderandtopursuehisfailedmotiontodismiss
toitsfullresolution.

2. On April 24, 2003, he moved for reconsideration of the Omnibus Order of April 2, 2003, but his
[14]
motionwasdeniedinanOrderofJuly4,2003.


3.OnAugust26,2003,YangwenttotheCourtofAppeals(CA)inapetitionforcertiorariunderRule65
[15]
oftheRulesofCourt,docketedasCAG.R.SPNo.78774,
tonullifytheseparateordersofthetrialcourt,
the first denying his motion to dismiss the basic complaint and, the second, denying his motion for
reconsideration.

Earlier, Eduardo and the corporate defendants, on the contention that grave
abuse of discretion and injudicious haste attended the issuance of the trial courts
aforementionedOmnibusOrdersdatedMarch5,andApril2,2003,soughtrelieffrom
the CA via similar recourse. Their petition for certiorari was docketed as CA G.R. SP

No.76987.

[16]
Per its resolution dated October 2, 2003,
the CAs 14th Division ordered the
consolidationofCAG.R.SPNo.78774withCAG.R.SPNo.76987.

Following the submission by the parties of their respective Memoranda of

Authorities, the appellate court came out with the herein assailed Decision dated
March31,2004,findingforEduardoandYang,asleadpetitionerstherein,disposing
asfollows:

WHEREFORE,judgmentisherebyrenderedgrantingtheissuanceofthewritofcertiorari
intheseconsolidatedcasesannulling,reversingandsettingasidetheassailedordersofthecourta
quo dated March 5, 2003, April 2, 2003 and July 4, 2003 and the complaint filed by private
respondent[nowpetitionerAurelio]againstallthepetitioners[nowhereinrespondentsEduardo,
etal.]withthecourtaquoisherebydismissed.
[17]
SOORDERED.
(Emphasisintheoriginalwordsinbracketadded.)

Explaining its case disposition, the appellate court stated, inter alia, that the alleged
partnership,asevidencedbytheactionabledocuments,Annex Aand A1attachedto
thecomplaint,anduponwhichpetitionersolelypredicateshisright/sallegedlyviolated
byEduardo,Yangandthecorporatedefendantsaquoisvoidorlegallyinexistent.
In time, petitioner moved for reconsideration but his motion was denied by the
[18]
CAinitsequallyassailedResolutionofDecember7,2004.
.

Hence,petitionerspresentrecourse,onthecontentionthattheCAerred:

A.Whenitruledthattherewasnopartnershipcreatedbytheactionabledocumentbecausethis
wasnotapublicinstrumentandimmovablepropertieswerecontributedtothepartnership.

B. When it ruled that the actionable document did not create a demandable right in favor of
petitioner.

C.Whenitruledthatthecomplaintstatednocauseofactionagainst[respondent]RobertYang
and

D. When it ruled that petitioner has changed his theory on appeal when all that Petitioner had
donewastosupporthispleadedcauseofactionbyanotherlegalperspective/argument.

Thepetitionlacksmerit.

Petitionersdemand,asdefinedinthepetitoryportionofhiscomplaintinthetrial
court, is for delivery or payment to him, as Eduardos and Yangs partner, of his
partnership/jointventureshare,afteranaccountinghasbeendulyconductedofwhat
[19]
hedeemstobepartnership/jointventureproperty.

A partnership exists when two or more persons agree to place their money,
effects, labor, and skill in lawful commerce or business, with the understanding that
[20]
thereshallbeaproportionatesharingoftheprofitsandlossesbetweenthem.
A
contractofpartnershipisdefinedbytheCivilCodeasonewheretwoormorepersons
boundthemselvestocontributemoney,property,orindustrytoacommonfundwith
[21]
the intention of dividing the profits among themselves.
A joint venture, on the
otherhand,ishardlydistinguishablefrom,andmaybelikenedto,apartnershipsince
theirelementsaresimilar, i.e.,communityofinterestsinthebusinessandsharingof
profitsandlosses.Beingaformofpartnership,ajointventureisgenerallygoverned
[22]
bythelawonpartnership.

The underlying issue that necessarily comes to mind in this proceedings is

whetherornotpetitionerandrespondentEduardoarepartnersinthetheatre,shipping
andrealtybusiness,asoneclaimsbutwhichtheotherdenies.Andtheissuebearingon
the first assigned error relates to the question of what legal provision is applicable
underthepremises,petitionerseeking,asitwere,toenforcetheactionabledocument
AnnexA1whichhedepictsinhiscomplainttobethecontractofpartnership/joint
venture between himself and Eduardo. Clearly, then, a look at the legal provisions

determinative of the existence, or defining the formal requisites, of a partnership is

indicated.ForemostofthesearethefollowingprovisionsoftheCivilCode:

Art. 1771. A partnership may be constituted in any form, except where immovable property or
realrightsarecontributedthereto,inwhichcaseapublicinstrumentshallbenecessary.

Art. 1772. Every contract of partnership having a capital of three thousand pesos or more, in
moneyorproperty,shallappearinapublicinstrument,whichmustberecordedintheOfficeof
theSecuritiesandExchangeCommission.

Failuretocomplywiththerequirementoftheprecedingparagraphshallnotaffecttheliabilityof
thepartnershipandthemembersthereoftothirdpersons.

Art.1773.Acontractofpartnershipisvoid,wheneverimmovablepropertyiscontributedthereto,
if an inventory of said property is not made, signed by the parties, and attached to the public
instrument.

Annex A1, on its face, contains typewritten entries, personal in tone, but is
unsigned and undated. As an unsigned document, there can be no quibbling that
Annex A1 does not meet the public instrumentation requirements exacted under
Article 1771 of the Civil Code. Moreover, being unsigned and doubtless referring to a
partnershipinvolvingmorethanP3,000.00inmoneyorproperty,Annex A1cannotbe
presented for notarization, let alone registered with the Securities and Exchange
Commission(SEC),ascalledforundertheArticle1772oftheCode.Andinasmuchas
the inventory requirement under the succeeding Article 1773 goes into the matter of
validity when immovable property is contributed to the partnership, the next logical
pointofinquiryturnsonthenatureofpetitionerscontribution,ifany,tothesupposed
partnership.

The CA, addressing the foregoing query, correctly stated that petitioners
contributionconsistedofimmovablesandrealrights.Wrotethatcourt:

A further examination of the allegations in the complaint would show that [petitioners]
contribution to the socalled partnership/joint venture was his supposed share in the family
business that is consisting of movie theaters, shipping and land development under paragraph
3.02ofthecomplaint.Inotherwords,hiscontributionasapartnerintheallegedpartnership/joint
[23]
ventureconsistedofimmovablepropertiesandrealrights..

Significantly enough, petitioner matteroffactly concurred with the appellate

courts observation that, prescinding from what he himself alleged in his basic
complaint, his contribution to the partnership consisted of his share in the Litonjua
family businesses which owned variable immovable properties. Petitioners assertion in

[24]
hismotionforreconsideration
oftheCAsdecision,thatwhatwastobecontributed

to the business [of the partnership] was [petitioners] industry and his share in the
family [theatre and land development] business leaves no room for speculation as to
whatpetitionercontributedtotheperceivedpartnership.

Lestitbeoverlooked,thecontractvalidatinginventoryrequirementunderArticle
1773oftheCivilCodeappliesaslongrealpropertyorrealrightsareinitiallybrought
intothepartnership.Inshort,itisreallyofnomomentwhichofthepartners,or,inthis
case, who between petitioner and his brother Eduardo, contributed immovables. In
context, the more important consideration is that real property was contributed, in
whichcaseaninventoryofthecontributedpropertydulysignedbythepartiesshould
beattachedtothepublicinstrument,elsethereislegallynopartnershiptospeakof.

Petitioner,inanobviousbidtoevadetheapplicationofArticle1773,arguesthat
the immovables in question were not contributed, but were acquired after the
formation of the supposed partnership. Needless to stress, the Court cannot accord
cogency to this specious argument. For, as earlier stated, petitioner himself admitted
contributinghisshareinthesupposedshipping,movietheatresandrealtydevelopment
family businesses which already owned immovables even before Annex A1 was
allegedlyexecuted.

Considering thus the value and nature of petitioners alleged contribution to the
purported partnership, the Court, even if so disposed, cannot plausibly extend Annex

A1thelegaleffectsthatpetitionersodesiresandpleadstobegiven.Annex A1, in
fine, cannot support the existence of the partnership sued upon and sought to be
enforced. The legal and factual milieu of the case calls for this disposition. A
partnership may be constituted in any form, save when immovable property or real
rights are contributed thereto or when the partnership has a capital of at least
[25]
P3,000.00, in which case a public instrument shall be necessary.
And if only to
stress what has repeatedly been articulated, an inventory to be signed by the parties
and attached to the public instrument is also indispensable to the validity of the
partnershipwheneverimmovablepropertyiscontributedtoit.

Given the foregoing perspective, what the appellate court wrote in its assailed
[26]
Decision
abouttheprobativevalueandlegaleffectofAnnex A1commendsitself
forconcurrence:

Consideringthattheallegationsinthecomplaintshowedthat[petitioner]contributedimmovable
properties to the alleged partnership, the Memorandum (Annex A of the complaint) which purports to
establishthesaidpartnership/jointventureisNOTapublicinstrumentandtherewasNOinventoryofthe
immovable property duly signed by the parties. As such, the said Memorandum is null and void for
purposesofestablishingtheexistenceofavalidcontractofpartnership.Indeed,becauseofthefailureto
complywiththeessentialformalitiesofavalidcontract,thepurportedpartnership/jointventureislegally
inexistentanditproducesnoeffectwhatsoever.Necessarily,avoidorlegallyinexistentcontractcannot
bethesourceofanycontractualorlegalright.Accordingly,theallegationsinthecomplaint,including
theactionabledocumentattachedthereto,clearlydemonstratesthat[petitioner]hasNOvalidcontractual
or legal right which could be violated by the [individual respondents] herein. As a consequence,
[petitioners]complaintdoesNOTstateavalidcauseofactionbecauseNOTalltheessentialelementsof
acauseofactionarepresent.(Underscoringandwordsinbracketadded.)

Likewise welltaken are the following complementary excerpts from the CAs equally
[27]
assailed Resolution of December 7, 2004
denying petitioners motion for
reconsideration:

Further, We conclude that despite glaring defects in the allegations in the complaint as well as the
actionabledocumentattachedthereto(Rollo,p.191),the[trial]courtdidnotappreciateandapply
the legal provisions which were brought to its attention by herein [respondents] in the their
pleadings. In our evaluation of [petitioners] complaint, the latter alleged inter alia to have
contributedimmovablepropertiestotheallegedpartnershipbuttheactionabledocumentisnota
publicdocumentandtherewasnoinventoryofimmovablepropertiessignedbytheparties.Both
theallegationsinthecomplaintandtheactionabledocumentsconsidered,itiscrystalclearthat
[petitioner] has no valid or legal right which could be violated by [respondents]. (Words in
bracketadded.)

Underthesecondassignederror,itispetitionersposturethatAnnex A1,assumingits
inefficacyornullityasapartnershipdocument,neverthelesscreateddemandable
rightsinhisfavor.Aspetitionersuccinctlyputsitinthispetition:

43. Contrariwise, this actionable document, especially its abovequoted provisions, established an
actionablecontracteventhoughitmaynotbeapartnership.Thisactionablecontractiswhatis
knownasaninnominatecontract(CivilCode,Article1307).

44.Itmaynotbeacontractofloan,oramortgageorwhatever,butsurelythecontractdoescreaterights
and obligations of the parties and which rights and obligations may be enforceable and
demandable.Justbecausetherelationshipcreatedbytheagreementcannotbespecificallylabeled
orpigeonholedintoacategoryofnominatecontractdoesnotmeanitisvoidorunenforceable.

Petitioner has thus thrusted the notion of an innominate contract on this Court and
earlier on the CA after he experienced a reversal of fortune thereat as an
afterthought.Theappellatecourt,however,cannotreallybefaultedfornotyieldingto
petitioners dubious stratagem of altering his theory of joint venture/partnership to an
innominate contract. For, at bottom, the appellate courts certiorari jurisdiction was
circumscribedbywhatwasallegedtohavebeentheorder/sissuedbythetrialcourtin
[28]
graveabuseofdiscretion.AsrespondentYangpointedlyobserved,
sincetheparties
basic position had been welldefined, that of petitioner being that the actionable
document established a partnership/joint venture, it is on those positions that the
appellate court exercised its certiorari jurisdiction. Petitioners act of changing his
originaltheoryisanimpermissiblepracticeandconstitutes,astheCAaptlydeclared,an
admissionoftheuntenabilityofsuchtheoryinthefirstplace.

[Petitioner]isnowhummingadifferenttune....Inasuddentwistofstance,hehasnowcontendedthat
the actionable instrument may be considered an innominate contract. xxx Verily, this now
changes[petitioners]theoryofthecasewhichisnotonlyprohibitedbytheRulesbutalsoisan
implied admission that the very theory he himself has adopted, filed and prosecuted before the
respondentcourtiserroneous.

Be that as it may . . We hold that this new theory contravenes [petitioners] theory of the actionable
document being a partnership document. If anything, it is so obvious we do have to test the
[29]
sufficiency of the cause of action on the basis of partnership law xxx.
(Emphasis in the
originalWordsinbracketadded).

But even assuming in gratia argumenti that Annex A1 partakes of a perfected

innominatecontract,petitionerscomplaintwouldstillbedismissibleasagainstEduardo
and, more so, against Yang. It cannot be overemphasized that petitioner points to
Eduardo as the author of Annex A1. Withal, even on this consideration alone,
petitionersclaimagainstYangisdoomedfromtheverystart.

Asitwere,theonlyportionofAnnexA1whichcouldperhapsberemotelyregardedas
vestingpetitionerwitharighttodemandfromrespondentEduardotheobservanceofa
determinateconduct,reads:

xxxYouwillbetheonlyoneleftwiththecompany,amongusbrothersandIwillaskyoutostayasI
wantyoutorunthisofficeeverytimeIamaway.IwantyoutorunitthewayIamtryingtorunit
becauseIwillbealoneandIwilldependentirelytoyou,Mysonswillnotbereadytohelpme
yetuntilaboutmaybe15/20yearsfromnow.Whateverisleftinthecorporation,Iwillmakesure
thatyougetONEMILLIONPESOS(P1,000,000.00)ortenpercent(10%)equity,whicheveris
greater.(Underscoringadded)

ItisatonceapparentthatwhatrespondentEduardoimposeduponhimselfunderthe
above passage, if he indeed wrote Annex A1, is a promise which is not to be
performed within one year from contract execution on June 22, 1973.
Accordingly,theagreementembodiedinAnnex A1iscoveredbytheStatuteof
[30]
Fraudsandergounenforceablefornoncompliancetherewith.
Byforceofthe
statuteoffrauds,anagreementthatbyitstermsisnottobeperformedwithina
yearfromthemakingthereofshallbeunenforceablebyaction,unlessthesame,
orsomenoteormemorandumthereof,beinwritingandsubscribedbytheparty
charged.Corollarily,noactioncanbeprovedunlesstherequirementexactedby
[31]
thestatuteoffraudsiscompliedwith.
Lest it be overlooked, petitioner is the intended beneficiary of the P1 Million or 10%
equity of the family businesses supposedly promised by Eduardo to give in the
nearfuture.Anysuggestionthatthestatedamountortheequitycomponentof
thepromisewasintendedtogotoacommonfundwouldbetoreadsomething
notwritteninAnnex A1. Thus, even this angle alone argues against the very
idea of a partnership, the creation of which requires two or more contracting
mindsmutuallyagreeingtocontributemoney,propertyorindustrytoacommon
[32]
fundwiththeintentionofdividingtheprofitsbetweenoramongthemselves.
In sum then, the Court rules, as did the CA, that petitioners complaint for specific
performance anchored on an actionable document of partnership which is legally
inexistentorvoidor,atbest,unenforceabledoesnotstateacauseofactionasagainst
respondentEduardoandthecorporatedefendants.Andifnoofactioncansuccessfully
be maintained against respondent Eduardo because no valid partnership existed
betweenhimandpetitioner,theCourtcannotseeitswayclearonhowthesameaction
couldplausiblyprosperagainstYang.Surely,Yangcouldnothavebecomeapartnerin,
orcouldnothavehadanyformofbusinessrelationshipwith,aninexistentpartnership.

As may be noted, petitioner has not, in his complaint, provide the logical nexus that
would tie Yang to him as his partner. In fact, attendant circumstances would indicate
thecontrary.Consider:

1.Petitionerassertedinhiscomplaintthathissocalledjointventure/partnershipwithEduardowasfor
thecontinuationoftheirfamilybusinessandcommonfamilyfundswhichweretheretoforebeingmainly

managed by Eduardo.
disputedthedisclaimer.

[33]

But Yang denies kinship with the Litonjua family and petitioner has not

2. In some detail, petitioner mentioned what he had contributed to the joint venture/partnership with
Eduardoandwhathisshareinthebusinesseswillbe.NoallegationismadewhatsoeveraboutwhatYang
contributed,ifany,letalonehisproportionalshareintheprofits.Butsuchallegationcannot,however,be
madebecause,asaptlyobservedbytheCA,theactionabledocumentdidnotcontainsuchprovision,let
alone mention the name of Yang. How, indeed, could a person be considered a partner when the
documentpurportingtoestablishthepartnershipcontractdidnotevenmentionhisname.

3. Petitioner states in par. 2.01 of the complaint that [he] and Eduardo are business partners in the
[respondent]corporations,whileBobbyishisandEduardospartnerintheirOdeonTheaterinvestment
(par. 2.03). This means that the partnership between petitioner and Eduardo came first Yang became
theirpartnerintheirOdeonTheaterinvestmentthereafter.Severalparagraphslater,however,petitioner
would contradict himself by alleging that his investment and that of Eduardo and Yang in the Odeon
theaterbusinesshasexpandedthroughareinvestmentofprofitincomeanddirectinvestmentsinseveral
corporationincludingbutnotlimitedto[six]corporaterespondentsThissimplymeansthattheOdeon
Theatre business came before the corporate respondents. Significantly enough, petitioner refers to the
[34]
corporaterespondentsasprogenyoftheOdeonTheatrebusiness.

Needlesstostress,petitionerhasnotsufficientlyestablishedinhiscomplaintthelegal

vinculumwhencehesourcedhisrighttodragYangintothefray.TheCourtofAppeals,
in its assailed decision, captured and formulated the legal situation in the following
wise:

[Respondent] Yang, is impleaded because, as alleged in the complaint, he is a partner of

[Eduardo] and the [petitioner] in the Odeon Theater Investment which expanded through
reinvestmentsofprofitsanddirectinvestmentsinseveralcorporations,thus:

xxxxxxxxx

Clearly,[petitioners]claimagainstYangarosefromhisallegedpartnershipwithpetitionerandthe
respondent.However,therewasNOallegationinthecomplaintwhichdirectlyallegedhowthe
supposed contractual relation was created between [petitioner] and Yang. More importantly,
however,theforegoingrulingofthisCourtthatthepurportedpartnershipbetween[Eduardo]is
voidandlegallyinexistentdirectlyaffectssaidclaimagainstYang.Since[petitioner]istryingto
establish his claim against Yang by linking him to the legally inexistent partnership . . . such
attempt had become futile because there was NOTHING that would contractually connect
[petitioner]andYang.Toestablishavalidcauseofaction,thecomplaintshouldhaveastatement
offactuponwhichtoconnect[respondent]Yangtotheallegedpartnershipbetween[petitioner]
andrespondent[Eduardo],includingtheirallegedinvestmentintheOdeonTheater.Astatement
of facts on those matters is pivotal to the complaint as they would constitute the ultimate facts
[35]
necessarytoestablishtheelementsofacauseofactionagainstYang.

Pressingitspoint,theCAlaterstatedinitsresolutiondenyingpetitionersmotion
forreconsiderationthefollowing:

xxx Whatever the complaint calls it, it is the actionable document attached to the
complaintthatiscontrolling.Sufficeittostate,WehavenotignoredtheactionabledocumentAs
amatteroffact,Weemphasizedinourdecisionthatinsofaras[Yang]isconcerned,heisnoteven
mentionedinthesaidactionabledocument.Wearethereforepuzzledhowapersonnotmentioned
[36]
inadocumentpurportingtoestablishapartnershipcouldbeconsideredapartner.
(Wordsin
bracketours).

The last issue raised by petitioner, referring to whether or not he changed his
theoryofthecase,asperemptorilydeterminedbytheCA,hasbeendiscussedatlength
earlierandneednotdetainuslong.SufficeittosaythataftertheCAhasruledthatthe
alleged partnership is inexistent, petitioner took a different tack. Thus, from a joint
venture/partnershiptheorywhichheadoptedandconsistentlypursuedinhiscomplaint,
petitioner embraced the innominate contract theory. Illustrative of this shift is
petitioners statement in par. #8 of his motion for reconsideration of the CAs decision
combinedwithwhathesaidinpar.#43ofthispetition,asfollows:

8. Whether or not the actionable document creates a partnership, joint venture, or

whatever,isalegalmatter.Whatisdeterminativeforpurposesofsufficiencyofthecomplainants
allegations, is whether the actionable document bears out an actionable contract be it a
partnership, a joint venture or whatever or some innominate contract It may be noted that one
[37]
kindofinnominatecontractiswhatisknownasduutfacias(Igivethatyoumaydo).

43. Contrariwise, this actionable document, especially its abovequoted provisions,

established an actionable contract even though it may not be a partnership. This actionable
[38]
contractiswhatisknownasaninnominatecontract(CivilCode,Article1307).

Springingsurprisesontheopposingpartyisoffensivetothesportingideaoffairplay,
justice and due process hence, the proscription against a party shifting from one
[39]
theoryatthetrialcourttoanewanddifferenttheoryintheappellatecourt.
Onthe
samerationale,anissuewhichwasneitheraverredinthecomplaintcannotberaised
[40]
forthefirsttimeonappeal.
Itisnotdifficult,therefore,toagreewiththeCAwhen
it made short shrift of petitioners innominate contract theory on the basis of the
foregoingbasicreasons.
Petitioners protestation that his act of introducing the concept of innominate contract
wasnotacaseofchangingtheoriesbutofsupportinghispleadedcauseofactionthat
of the existence of a partnership by another legal perspective/argument, strikes the
Court as a strained attempt to rationalize an untenable position. Paragraph 12 of his

motionforreconsiderationoftheCAsdecisionvirtuallyrelegatespartnershipasafall
back theory. Two paragraphs later, in the same notion, petitioner faults the appellate
court for reading, with myopic eyes, the actionable document solely as establishing a
partnership/jointventure.Verily,thecitedparagraphsareastudyofapartyhedgingon
whether or not to pursue the original cause of action or altogether abandoning the
same,thus:

12. Incidentally, assuming that the actionable document created a partnership between [respondent]
Eduardo,Sr.and[petitioner],noimmovableswerecontributedtothispartnership.xxx

14.Alltold,theDecisiontakesofffromafalsepremisethattheactionabledocumentattachedto
thecomplaintdoesnotestablishacontractualrelationshipbetween[petitioner]andEduardo, Sr.
andRobertoTYangsimplybecausehisdocumentdoesnotcreateapartnershiporajointventure.
Thisisamyopicreadingoftheactionabledocument.

Per the Courts own count, petitioner used in his complaint the mixed words joint

venture/partnershipnineteen(19)timesandtheterm partnerfour(4)times.Hemade
reference to the law of joint venture/partnership [being applicable] to the business
relationshipbetween[him],EduardoandBobby[Yang] andtohisrightsinallspecific
propertiesoftheirjointventure/partnership.Giventhisconsideration,petitionersright
of action against respondents Eduardo and Yang doubtless pivots on the existence of
the partnership between the three of them, as purportedly evidenced by the undated
andunsignedAnnexA1.AvoidAnnexA1,asanactionabledocumentofpartnership,
wouldstrippetitionerofacauseofactionunderthepremises.Acomplaintfordelivery
and accounting of partnership property based on such void or legally nonexistent
actionable document is dismissible for failure to state of action. So, in gist, said the
CourtofAppeals.TheCourtagrees.
WHEREFORE, the instant petition is DENIED and the impugned Decision and
ResolutionoftheCourtofAppealsAFFIRMED.

Costagainstthepetitioner.

SOORDERED.

CANCIOC.GARCIA
AssociateJustice

WECONCUR:

ARTEMIOV.PANGANIBAN
AssociateJustice

ANGELINASANDOVALGUTIERREZ
AssociateJustice

RENATOC.CORONA
AssociateJustice

CONCHITACARPIOMORALES
AssociateJustice

ATTESTATION

Iattestthattheconclusionsintheabovedecisionwerereachedinconsultationbefore
thecasewasassignedtothewriteroftheopinionoftheCourtsDivision.

ARTEMIOV.PANGANIBAN
AssociateJustice
Chairman,ThirdDivision

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairman's
Attestation, it is hereby certified that the conclusions in the above decision were
reachedinconsultationbeforethecasewasassignedtothewriteroftheopinionofthe
Court.

HILARIOG.DAVIDE,JR.
ChiefJustice

[1]
Penned by Associate Justice Bienvenido L. Reyes, concurred in byAssociate Justices Conrado M. Vasquez, Jr. and Arsenio J.
MagpaleRollo,pp.27etseq.
[2]
Rollo,pp.58etseq.
[3]
Ibid,pp.63etseq.
[4]
PresidedbyHon.SantiagoG.Estrella.
[5]
Par.2.03oftheComplaint.
[6]
Rollo,p.552.
[7]
Id.,pp.70etseq.
[8]
Id.,pp.99etseq.
[9]
Id.,pp.87etseq.
[10]
Id.,pp.93etseq.
[11]
Id.,pp.9798.
[12]
Id.,pp.135etseq.
[13]
SeeNoteNo.8,supra.
[14]
Rollo,p.161.
[15]
Ibid,pp.206etseq.
[16]
Id.,p.253.
[17]
AscorrectedperCAResolutiondatedJuly14,2004toconformtotheactualdatesoftheassailedordersRollo,pp.326etseq.
ThecorrectionconsistedofchangingthedatesMarch5,2002,April2,2002andJuly2,2003appearingintheoriginalCA
decisiontoMarch5,2003,April2,2003andJuly4,2003,respectively.
[18]
SeeNote#2,supra.
[19]
Complaint,p.6Rollo,p.68.
[20]
BlacksLawDictionary,6thed.,p.1120.
[21]
Art.1767.
[22]
HeirsofTanEngKeevs.CA,341SCRA740[2000],citingAurbachvs.SanitaryWaresManufacturingCorp.,180SCRA130
[1989].
[23]
At.p.6oftheDecision,Rollo,p.42.
[24]
Atp.6ofthemotionforreconsiderationRollo,p.55.
[25]
Vitug,COMPENDIUMofCIVILLAWandJURISPRUDENCE,Rev.ed.,(1993),p.712.
[26]
SeeNote#1,supra.
[27]
SeeNote#2,supra.
[28]
Page26ofYangsMemorandumRollo,p.494.
[29]
Page4oftheCAsassailedResolutionRollo,p.61.

[30]
#2(a)ofArt.1403oftheCivilCode.
[31]
Tolentino,CIVILCODEOFTHEPHILIPPINES,Vol.IV,1991ed.,p.617.
[32]
HeirsofTanEngKeevs.CA,supra.
[33]
Par.3.01oftheComplaintRollo,p.64.
[34]
Petition,p.18Rollo,p.20.
[35]
Rollo,p.45.
[36]
Ibid,p.61.
[37]
Rollo,p.53Citationsomitted.
[38]
Ibid,p.19.
[39]
SanAgustinvs.Barrios,68Phil.475[1939]citingothercases.
[40]
UnionBankvs.CA,359SCRA480[2001].