Partnership Case Doctrines and Evidences of Partnership

Lim Tong Lim vs PFGI (Engage in commercial fishing case)

 Started with Php 3.35M financed by a loan. Is this a valid contribution?
The contribution of a partner may be in the three forms of money, property and industry, or
any two or one of them. A partnership may, therefore, exist even if it is shown that
the partners have not contributed any capital of their own to a “common fund’’ for the
contribution may be in the form of credit or industry not necessarily cash or fixed assets.

Evidence of Partnership:
1. Contribution in the form of credit and industry
2. Lim approached Yao, already partners with Chua, to engage in commercial fishing
3. Compromise Agreement agreeing to split the profit or evenly pay the loss of the sale of
the boats

Evangelista vs CIR (3 sisters tax case)

 Is contribution and intent to divide the profits enough to form a partnership?
No. There has to be:
1. An intent to form a partnership
2. General participation in both profit and loss
3. Community of interest as far as 3rd persons are concerned enabling each party to
manage the whole property

In this case, the 2nd and 3rd requirements are surely there. However, the intent to form the
partnership is derived from the following evidences:
1. The fund did not exist beforehand. There was an effort to create the fund for the
purpose of profit
2. Investments were a SERIES of transactions
3. The lots were not residential
4. Managed by one person similar to a business
5. The condition existed for more than 15 years

Estanislao vs CA (Gas station case)

 Is proof of contribution necessary?
Yes. The proof here is the Php15,000 pledge of capital in the joint affidavit which was cancelled
as it was duplicated in another contract with Shell. But the other contract did not mention of it
being a capital investment because of Shell’s policy of sole dealership.
Nevertheless there was an intent to form a partnership because of the following evidences:
 1. Petitioner’s written authority for his sister to examine the books of their common
business
2. His sister assisted in the business
3. The siblings contributed to a common fund, the Php15,000 advanced rentals due to
their co-ownership of the leased land

Heirs of Lim vs Lim (Trucking business case)

 Additional evidences of partnership:
1. Wielding absolute control of the business without intervention
2. All properties in the questioned partner’s name
3. No salary received
4. No demand of periodic accounting

Torres vs CA (Subdivision 2 sisters case)

 Is the requirement of an inventory under Art. 1773 absolute?

No. Art. 1773 will not make the partnership agreement void for purposes of liability within the
partnership i.e. no involvement of 3rd persons.

The purposes of Art. 1773 is to protect 3rd persons such as creditors so that they would know
the value of the partnership and know which properties they can go after. In this case, there is
no involvement of any 3rd persons so voiding the partnership agreement would be unnecessary.

Further, nothing prevents the court from treating the partnership agreement as an ordinary
contract which contains rights and obligations. In other words, the partnership may be void
technically but in the interest of justice it may be a source of rights and obligations.

Evidence of partnership(joint venture) in this case:

1. Contribution of property from the sisters, contribution of industry, general expenses
and cost for Manuel Torres.
2. Division of profits 60-40 share in agreement
Litonjua vs Litonjua (Brothers family business case) <<opposite of Torres>>
 Can the case of Torres apply here?
No, because of the following reasons:
1. No agreement whatsoever (unsigned letter only)
2. Not in a public instrument
3. Multiple immovable properties
4. Involvement of 3rd persons

Agad vs Mabolo/Mabato (Fishpond business case)

 Is the inventory requirement under 1773 necessary for all partnerships involving
immovable property?

No. The immovable property has to be a contribution.

A partnership contract which states that the partnership is established “to operate a fishpond”
(not “to engage in a fi shpond business”) is not rendered void because no inventory of the
fishpond was made where it did not clearly and positively appear in the articles of partnership
that the real property had been contributed by anyone of the partners.

Angeles vs Sec of Justice (Antichresis lanzones case)

 Is the public instrument requirement in 1771 and the inventory requirement under
1773 necessary for all partnerships involving immovable property?

No. The immovable property has to be a contribution.

The contribution in this case is the Php210,000 for the spouses and the industry of Mercado.
The immovable property may be the land used for growing Lanzones but it is not a
contribution to the partnership.

Evidence of partnership in this case:

1. Contribution of money for the spouses, contribution of industry for Mercado
2. Mercado deposited amounts to spouses’ account representing their share in the profit
3. Spouses admitted to facts establishing industrial partnership
Navarro vs CA (Air Freight Agency case)
 Is co-ownership or co-possession enough to form a partnership?
No. There has to be the intent to form a partnership.

This case lacks evidence of partnership:

1. Mere agreement of co-possession of the personal property (Art. 1769)
2. The property remained registered in Yanson’s name and not in the “partnership” name
3. Existence of a net worth is not automatically equivalent to profit