MAURO LOZANA,
plaintiff-appellee,-versus-
SERAFIN DEPAKAKIBO,
defendant-appellant.
LABRADOR,
J approval of the Public Service Commission, does not per se make the
.:
Lozana entered into a partnership with Depakakibo wherein they established
a capital of P30,000, Lozana furnishing 60%and Depakakibo, 40%, for the
purpose of maintaining, operating and distributing electric light and power in
the Municipality of Dumangas, under a franchise issued to Mrs. Piadosa
Buenaflor. However, the franchise or certificate of public necessity and
convenience in favor of Buenaflor was cancelled and revoked by the Public
Service Commission on May 15, 1955. But the decision of the Public Service
Commission was appealed to SC and a temporary certificate of public
convenience was issued in the name of Olimpia D. Decolongon. Evidently
because of the cancellation of thefranchise in the name of Buenaflor, Lozana
sold a generator to Decolongon in 1955. Depakakibo, on the other hand, sold
one Crossly Diesel Engine, to the spouses Felix Jimenea and Felina Harder in
1956.Lozana brought an action against Serafin, alleging that he is the owner of
the Generator Buda (Diesel), valued at P8,000and 70 wooden posts with the
wires connecting the generator to the different houses supplied by electric
current in the municipality, and that he is entitled to the possession thereof, but
that Serafin has wrongfully detained them as a consequence of which Lozana
suffered damages. He prayed that said properties be delivered back to him.
Judge Pelayoissued an order in said case authorizing the sheriff to take
possession of the generator and 70 wooden posts, upon plaintiff’s filing of a
bond in favor of the defendant (for subsequent delivery to the plaintiff).Serafin
denied that the generator and the equipment mentioned in the complaint
belong to the plaintiff and alleging that the same had been contributed by the
plaintiff to the partnership entered into between them in the same manner that
defendant had contributed equipments also, and therefore that he is not
unlawfully detaining them. Defendant alleged that under the partnership
agreement the parties were to contribute equipments, plaintiff contributing the
generator and the defendant, the wires for the purpose of installing the main
and delivery lines; that the plaintiff sold his contribution to the partnership, in
violation of the terms of their agreement. The judge entered a decision
declaring plaintiff owner of the equipment and entitled to the possession
thereof, with costs against defendant. It is against this judgment that the
defendant has appealed.
Issue:
W/N Lozana violated the partnership agreement.
Held:
Yes.
Ratio:
As it appears that the plaintiff and the defendant entered into the contract
of partnership, plaintiff contributing the amount of P18,000, and as it is not
stated therein that there has been a liquidation of the partnership assets at
the time plaintiff sold the Buda Diesel Engine on October 15, 1955, and since
the court below had found that the plaintiff had actually contributed one engine
and 70 posts to the partnership, it necessarily follows that the Buda diesel
engine contributed by the plaintiff had become the property of the partnership.
As properties of the partnership, the same could not be disposed of by the
party contributing the same without the consent or approval of the partnership
or of the other partner. The lower court declared that the contract of
partnership was null and void, because by the contract of partnership, the
parties thereto have become dummies of the owner of the franchise. The Anti-
Dummy law has not been violated as parties plaintiff and defendant are not
aliens but Filipinos. Upon examining the contract of partnership, especially the
provision thereon wherein the parties agreed to maintain, operate and
distribute electric light and power under the franchise belonging to Mrs.
Buenaflor, we do not find the agreement to be illegal, or contrary to law and
public policy such as to make the contract of partnership, null and void ab
initio.
The agreement could have been submitted to the Public Service Commission
if the rules of the latter require them to be so presented. But the fact of
furnishing the current to the holder of the franchise alone, without the previous
contract of partnership null and void from the beginning and render the
partnership entered into by the parties for the purpose also void and non-
existent. Under the circumstances, therefore, the court erred in declaring that
the contract was illegal from the beginning and that parties to the partnership
are not bound therefor, such that the contribution of the plaintiff to the
partnership did not pass to it as its property. It also follows that the claim of the
defendant in his counterclaim that the partnership be dissolved and its assets
liquidated is the proper remedy, not for each contributing partner to claim back
what he had contributed.
MAXIMILIANO SANCHO, vs. SEVERIANO LIZARRAGA
G.R.No. L-33580 February 6, 1931
Subject: BusOrg 1
FACTS:
The plaintiff brought an action for the rescission of the partnership contract
between himself and the defendant and the reimbursement of his investment
worth 50,000php with interest at 12 per cent per annum form October 15,
1920, with costs, and any other just and equitable remedy against said
defendant. The defendant denies generally and specifically all the allegations
of the complaint and asked for the dissolution of the partnership, and the
payment to him as its manager and administrator P500 monthly from October
15, 1920 until the final dissolution with interest.
The CFI found that the defendant had not contributed all the capital he had
bound himself to invest hence it demanded that the defendant liquidate the
partnership, declared it dissolved on account of the expiration of the period for
which it was constituted, and ordered the defendant, as managing partner, to
proceed without delay to liquidate it, submitting to the court the result of the
liquidation together with the accounts and vouchers within the period of thirty
days from receipt of notice of said judgment. The plaintiff appealed from said
decision praying for the rescission of the partnership contract between him and
the defendant in accordance with Art. 1124.
ISSUE:
WON plaintiff acquired the right to demand rescission of the partnership
contract according to article 1124 of the Civil Code.
HELD:
The SC ruled that owing to the defendant’s failure to pay to the partnership the
whole amount which he bound himself to pay, he became indebted to the
partnership for the remainder, with interest and any damages occasioned
thereby, but the plaintiff did not thereby acquire the right to demand rescission
of the partnership contract according to article 1124 of the Code. Article 1124
cannot be applied to the case in question, because it refers to the resolution of
obligations in general, whereas articles 1681 and 1682 specifically refer to the
contract of partnership in particular. And it is a well known principle that
special provisions prevail over general provisions. Hence, SC dismissed the
appeal left the decision appealed from in full force.
UY V. PUZON79 SCRA 598
A partner in a construction venture who failed to standby his commitment to
the partnership will be ordered to reimburse to his co-partner whatever the
latter invested and spent for the projects of the venture
RAMNANI v. CA
196 scra 731; May 7, 1991
Ponente: J. Gancayco
FACTS:
Ishwar, Choithram and Navalrai, all surnamed Jethmal Ramnani, are
brothers of the full blood. Ishwar and his spouse Sonya had their main
business based in New York. Realizing the difficulty of managing their
investments in the Philippines they executed a general power of attorney on
January 24, 1966 appointing Navalrai and Choithram as attorneys-in-fact,
empowering them to manage and conduct their business concern in the
Philippines
On February 1, 1966 and on May 16, 1966, Choithram entered into two
agreements for the purchase of two parcels of land located in Barrio Ugong,
Pasig, Rizal, from Ortigas & Company, Ltd. Partnership. A building was
constructed thereon by Choithram in 1966. Three other buildings were built
thereon by Choithram through a loan of P100,000.00 obtained from the
Merchants Bank as well as the income derived from the first building.
Sometime in 1970 Ishwar asked Choithram to account for the income and
expenses relative to these properties during the period 1967 to 1970.
Choithram failed and refused to render such accounting. Thereafter, Ishwar
revoked the general power of attorney. Choithram and Ortigas were duly
notified of such revocation on April 1, 1971 and May 24, 1971, respectively.
Said notice was also registered with the Securities and Exchange Commission
on March 29, 1971 and was published in the April 2, 1971 issue of The Manila
Times for the information of the general public.
Nevertheless, Choithram, transferred all rights and interests of Ishwar and
Sonya in favor of his daughter-in-law, Nirmla Ramnani, on February 19, 1973.
On October 6, 1982, Ishwar and Sonya filed a complaint against Choitram
and/or spouses Nirmla and Moti and Ortigas for reconveyance of said
properties or payment of its value and damages.
ISSUE:
Whether Ishram can recover the entire properties subject in the
ligitation
HELD:
No, Ishram cannot recover the entire properties subject.
The Supreme Court held that 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.
Choithram in turn decided to invest in the real estate business. He bought the
two (2) parcels of land in question from Ortigas as attorney-in-fact of Ishwar.
Instead of paying for the lots in cash, he paid in installments and used the
balance of the capital entrusted to him, plus a loan, to build two buildings.
Although the buildings were burned later, Choithram was able to build two
other buildings on the property. He rented them out and collected the rentals.
Through the industry and genius of Choithram, Ishwar's property was
developed and improved into what it is now.
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.
DAN FUE LEUNG, petitioner,vs.HON. INTERMEDIATE APPELLATE COURT
and LEUNG YIU, respondents.
FACTS:
The petitioner asks for the reversal of the decision of the Appellate Court in
which affirmed the decision of the lower court declaring private respondent
Leung Yiu a partner of petitioner Dan Fue Leung in the business of Sun Wah
Panciteria and ordering the petitioner to pay to the private respondent his
share in the annual profits of the said restaurant. This case originated from a
complaint filed by respondent Leung Yiu with the lower court to recover the
sum equivalent to twenty-two percent (22%) of the annual profits derived from
the operation of Sun Wah Panciteria since October, 1955 from petitioner Dan
Fue Leung.The Sun Wah Panciteria was registered as a single proprietorship
and its licenses and permits were issued to and infavor of petitioner Dan Fue
Leung as the sole proprietor. Respondent Leung Yiu adduced evidence during
the trial of the case to show that Sun Wah Panciteria was actually a
partnership and that he was one of the partners having contributed P4,000.00
to its initial establishment.Lower court ruled in favor of the private respondent.
Petitioner appealed the trial court's amended decision. However, the
questioned decision was further modified and affirmed by the appellate court.
Both the trial court and the appellate court declared that the private petitioner
is a partner and is entitled to a share of the annual profits of the restaurant.
Hence, an appeal to the SC.The petitioner argues that private respondent
extended 'financial assistance ‘to herein petitioner at the time of the
establishment of the Sun Wah Panciteria, in return of which private respondent
allegedly will receive a share in the profits of the restaurant. It was, therefore,
error for the Appellate Court to interpretor construe 'financial assistance' to
mean the contribution of capital by a partner to a partnership.
ISSUE:WON the private respondent is a partner of the petitioner in the
establishment of Sun Wah Panciteria.
HELD:In essence, the private respondent alleged that when Sun Wah
Panciteria was established, he gave P4,000.00 to thepetitioner with the
understanding that he would be entitled to twenty-two percent (22%) of the
annual profit derivedfrom the operation of the said panciteria. These
allegations, which were proved, make the private respondent and thepetitioner
partners in the establishment of Sun Wah Panciteria because Article 1767 of
the Civil Code provides that"By the contract of partnership two or more
persons bind themselves to contribute money, property or industry to
acommon fund, with the intention of dividing the profits
among themselves".Therefore, the lower courts did not err in construing the
complaint as one wherein the private respondent asserted hisrights as partner
of the petitioner in the establishment of the Sun Wah Panciteria,
notwithstanding the use of the termfinancial assistance therein.SC affirmed
appellate court¶s decision and ordered the dissolution of the partnership.
Sison v. Helen McQuaid December 29, 1953
Principle: Liquidation shall happen before a partner may claim his share of
profit from the partnership.
Facts:Plaintiff brought an action in the CFI against defendant. Defendant
borrowed from him money (P 2,210) to enable her to payher obligations and to
add to her capital in her lumber business. She could not pay so she proposed
to take plaintiff as apartner in her business, plaintiff to contribute the P 2,210
due him from defendant.Before the last World War, the partnership sold
230,000‐board ft. of lumbe rto the US Army for P 13,800.00.
Defendantrefused to deliver ½ of it (P 6,900.00) to plaintiff despite his
repeated demands. Plaintiff filed an action to compel defendant topay him his
half of the profit from the partnership.The case was dismissed upon the ground
of prescription.
Issue: Whether or not plaintiff is entitled to the sum he claims
Held:
NO. Order of dismissal was affirmed, but on the ground that the
complaint states no cause of action.Ratio: It is not clear from the complaint just
when the cause of action accrued. Thus the dismissal of the case is
erroneous.However order should be retained on the ground that the complaint
has no cause of action. Plaintiff seeks to recover fromdefendant one-half of the
purchase price of lumber sold by the partnership to the United States Army.
But his complaint doesnot show why he should be entitled to the sum he
claims. It does not allege that there has been a liquidation of the
partnershipbusiness and the said sum has been found to be due him as his
share of the profits. The proceeds from the sale of a certainamount of lumber
cannot be considered profits until costs and expenses have been deducted.
Moreover, the profits of thebusiness cannot be determined by taking into
account the result of one particular transaction instead of all the
transactionshad. Hence, the need for a general liquidation before a member of
a partnership may claim a specific sum as his share of theprofits.
ORNUM v. LASALA1.
In 1908 Pedro Lasala, father of the respondents, andEmerenciano Ornum
formed a partnership2. Lasala as capitalist while Ornum will be the industrial
partner3. Lasala delivered the sum of P1,000 to Ornum who will conducta
business at his place of residence in Romblon.4. In 1912, when the assets of
the partnership consisted ofoutstanding accounts and old stock of
merchandise,Emerenciano Ornum, following the wishes of his wife, asked
forthe dissolution of the Lasala, Emerenciano5. Ornum looked for some one
who could take his place and hesuggested the names of the petitioners who
accordinglybecame the new partners.6. Upon joining the business, the
petitioners, contributed P505.54as their capital7. the new partnership Pedro
Lasala had a capital of P1,000,appraised value of the assets of the former
partnership, plusthe said P505.54 invested by the petitioners who, as
industrialpartners, were to run the business in Romblon.8. After the death of
Pedro Lasala, his children (the respondents)succeeded to all his rights and
interest in the partnership.9. The partners never knew each other
personally.10. No formal partnership agreement was ever executed.11. The
petitioners, as managing partners, were receivedone-half of the net gains, and
the other half was to be dividedbetween them and the Lasala group in
proportion to the capitalput in by each group.12. During the course divided, but
the partners were given theelection, as evidenced by the statements of
accounts referredto in the decision of the Court of Appeals, to invest
theirrespective shares in such profits as additional capital.13. The petitioners
accordingly let a greater part of theirprofits as additional investment in the
partnership.14. After twenty years the business had grown to such anextent
that is total value, including profits, amounted toP44,618.67.15. Statements of
accounts were periodically prepared by thepetitioners and sent to the
respondents who invariably did notmake any objection thereto.
16. Before the last statement of accounts was made, therespondents had
received P5,387.29 by way of profits.17. The last and final statement of
accounts, dated May 27,1932, and prepared by the petitioners after the
respondentshad announced their desire to dissolve the partnership,18.
Pursuant to the request contained in this letter, thepetitioners remitted and
paid to the respondents the totalamount corresponding to them under the
above-quotedstatement of accounts which, however, was not signed by
thelatter.19. Thereafter the complaint in this case was filed by therespondents,
praying for an accounting and final liquidation ofthe assets of the
partnership.20. The Court of First Instance of Manila held that the lastand final
statement of accounts prepared by the petitioners wastacitly approved and
accepted by the respondents who, byvirtue of the above-quoted letter of
Father Mariano Lasala, losttheir right to a further accounting from the moment
theyreceived and accepted their shares as itemized in saidstatement.21. This
judgment was reversed by the Court of Appealsprincipally on the ground that
as the final statement of accountsremains unsigned by the respondents, the
same standsdisapproved.22. The decision appealed by the petitioners
ISSUES:(1) WoN the accounting stated in the letter including the last andfinal
statement of account was tacitly accepted by thepetitioners as the final
liquidation and accounting of the assetsof the partnership?
(2) Are there really mistakes and misrepresentations made in thestatement of
accounts made?
Petitioners’ contention:
To support a plea of a stated account so as toconclude the parties in relation
to all dealings between them, theaccounting must be shown to have been
final. (1 Cyc. 366.) All thefirst nine statements which the defendants sent the
plaintiffs werepartial settlements, while the last, although intended to be final,
hasnot been signed.
HELD FOR ISSUE NO. 1: YES. SC stated that the last and finalstatement of
accounts hereinabove quoted, had been approved bythe respondents.
This approval resulted, by virtue of the letter of Father MarianoLasala of July
19, 1932, quoted in part in the appealed decisionfrom the failure of the
respondents to object to the statementand from their promise to sign the same
as soon as theyreceived their shares as shown in said statement.
After such shares had been paid by the petitioners andaccepted by the
respondents without any reservation, theapproval of the statement of accounts
was virtually confirmedand its signing thereby became a mere formality to be
compliedwith by the respondents exclusively. Their refusal to sign,
afterreceiving their shares, amounted to a waiver to that formality infavor of the
petitioners who has already performed theirobligation.
This approval precludes any right on the part of therespondents to a further
liquidation, unless the latter can showthat there was fraud, deceit, error or
mistake in said approval.(Pastor,
vs.
Nicasio, 6 Phil., 152; Aldecoa & Co.,
vs.
Warner,Barnes & Co., 16 Phil., 423; Gonsalez
vs.
Harty, 32 Phil. 328.)The Court of Appeals did not make any findings that there
wasfraud, and on the matter of error or mistake it merely said:
HELD FOR ISSUE NO. 2: the pronouncement that the evidencetends to prove
that there were mistakes in the petitioners' statementsof accounts, without
specifying the mistakes, merely intimates assuspicion and is not such a
positive and unmistakable finding of factas to justify a revision, especially
because the Court of Appeals hasrelied on the bare allegations of the parties,
Moreover, as thepetitioners did not appeal from the decision of the Court
abandonedsuch allegation in the Court of Appeals.
no justifiable reason (fraud, deceit, error or mistake) has beenpositively and
unmistakably found by the Court of Appeals so as to warrant the liquidations
sought by the respondents. In justice to the petitioners
It should be borne in mind that this case has been pending fornearly nine
years and that, if another accounting is ordered, acostly action or proceeding
may arise which may not bedisposed of within a similar period, it is not
improbable that theintended relief may in fact be the respondents' funeral.
EVANGELISTA & CO. v. ABAD SANTOS
EVANGELISTA & CO. v. ABAD SANTOS
G.R. No. L-31684; June 28, 1973
Ponente: J. Makalintal
FACTS:
On October 9, 1954 a co-partnership was formed under the name of
"Evangelista & Co." On June 7, 1955 the Articles of Co-partnership were
amended so as to include herein respondent, Estrella Abad Santos, as
industrial partner, with herein petitioners Domingo C. Evangelista, Jr.,
Leonarda 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 to let her examine the partnership books or to give her information
regarding the partnership affairs or to pay her any share in the dividends
declared by the partnership
The defendants, in their answer, 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 by way
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.
ISSUE:
Whether Abad Santos is entitled to see the partnership books because
she is an industrial partner in the partnership
HELD:
Yes, Abad Santos is entitled to see the partnership books.
The Supreme Court ruled that according to
ART. 1299. 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;
(4)Whenever other circumstances render it just and reasonable."
In the case at hand, the company is stopped from denying Abad Santos as an
industrial partner because it has been 8 years and the company never
corrected their agreement in order to show their true intentions. The company
never bothered to correct those up until Abad Santos filed a complaint.
ISSUE: Whether or not Abad Santos is an industrial partner and is entitled to
the shares of the partnership?
HELD: Yes. It is not disputed that the provision against the industrial partner
engaging in business for himself seeksto prevent any conflict of interest
between the industrial partner and the partnership, and to insure
faithfulcompliance by said partner with this prestation. That appellee
has faithfully complied with her prestation withrespect to appellants is clearly
shown by the fact that it was only after filing of the complaint in this case and
theanswer thereto appellants exercised their right of exclusion under the codal
art just mentioned by alleging in their Supplemental Answer, subsequent to the
filing of defendants' answer to the complaint, defendants reached
anagreement whereby the herein plaintiff been excluded from, and deprived
of, her alleged share, interests or participation, as an alleged industrial partner,
in the defendant partnership and/or in its net profits or income, on theground
plaintiff has never contributed her industry to the partnership, instead she has
been and still is a judge of theCity Court (formerly Municipal Court) of the
City of Manila, devoting her time to performance of her duties as suchjudge
and enjoying the privilege and emoluments appertaining to the said office,
aside from teaching in law schoolin Manila, without the express consent of the
herein defendants'. Having always knows as a appellee as a City judge even
before she joined appellant company as an industrial partner, why did it take
appellants many yearn before excluding her from said company
as aforequoted allegations? And how can they reconcile such exclusive with
their main theory that appellee has never been such a partner because "The
real agreement was to grant the appellee ashare of 30% of the net profits
which the appellant partnership may realize from June 7, 1955, until the
mortgage of P30,000.00 obtained from the Rehabilitation Finance Corporal
shall have been fully paid.
Carmen Liwanag v. CA and People
G.R. No. 114398 October 24, 1997
Romero, J.
Facts:
Liwanag asked Isidora Rosales to join her and Thelma Tagbilaran in the
business of buyingand selling cigarettes. Under their agreement, Rosales
would give the money needed
tobuy the cigarettes while Liwanag and Tabligan would act as her agents, with
acorresponding 40% commission to her if the goods are sold; otherwise the
money wouldbe returned to Rosales.
Rosales gave several cash advances amounting to 633,650.
Money was misappropriated. Rosales files a complaint of estafa against them.
Issue:
1. WON the parties entered into a partnership agreement; 2. if in the negative,
WONthe transaction is a simple loan
Held:
1. No. Even assuming that a contract of partnership was indeed entered into
by andbetween the parties, when money or property have been received by a
partner for a specificpurpose and he later misappropriated it, such partner is
guilty of estafa.2. No. In a contract of loan once the money is received by the
debtor, ownership over thesame is transferred. Being the owner, the borrower
can dispose of it for whatever purposehe may deem proper.
CATALAN vs. GATCHALIAN
105 Phil 1270, G.R. No. L-11648, April 22, 1959
FACTS:
Catalan and Gatchalian are partners. They mortgaged two lots to Dr. Marave
together with the improvements thereon to secure a credit from the latter. The
partnership failed to pay the obligation. The properties were sold to Dr. Marave
at a public auction. Catalan redeemed the property and he contends that title
should be cancelled and a new one must be issued in his name.
ISSUE:
Did Catalan’s redemp
tion of the properties make him the absolute owner of the lands?
HELD:
No. Under Article 1807 of the NCC every partner becomes a trustee for his
copartner with regard to any benefits or profits derived from his act as a
partner. Consequently, when Catalan redeemed the properties in question, he
became a trustee and held the same in trust for his co partner Gatchalian,
subject to his right to demand from the latter his contribution to the amount of
redemption
MARTINEZ v. ONG PONG CO Arellano, CJ (1910)
MARTINEZ delivered to Ong Pong Co and Ong Lay (ONGS) thesum of
P1,500. The ONGS, in a private document, acknowledged that they had
received the money with the agreement that theywill invest it in a store, and
the profits or losses therefrom was tobe divided with MARTINEZ in equal
shares
Later, MARTINEZ filed a complaint in order to compel the ONGSto render him
an accounting of the partnership, or else to refundhim the P1,500 that he had
given them
Ong Pong Co alone appeared to answer the complaint. Headmitted the fact of
the agreement, but he alleged that Ong Lay(deceased) was the one who had
managed the business, and that nothing had resulted therefrom except the
loss of the capital of P1,500, to which loss MARTINEZ agreed to bear
CFI rendered decision ordering Ong Pong Co to return toMARTINEZ one-half
of the capital of P1,500 (P750) plus P90 as one-half of the profits, calculated at
the rate of 12% per annumfor the six months that the store was supposed to
have been open(total of P840) with legal interest of 6% until the full
payment,with costs hence, this appeal by Ong Pong Co
ISSUE:
WON MARTINEZ is entitled to the capital hecontributed to the partnership
HELD:
YES. The ONGS failed to fulfill their obligation as partners who, acting as
MARTINEZ’s agents in receiving money, did not render proper accounting
therefor. Such renders them jointly liable for the losses, solidarity not having
been established.CFI decision is AFFRIMED in this regard but REVERSED
inasmuchas it found that the capital invested earned profits. Thus, the
CFIruling awarding MARTINEZ another P840 is DELETED. Ong PongCo is
only liable to pay MARTINEZ half of the capital, or P750,representing half of
the loss which both ONGS should jointly
beardue to their omission, to earn legal interest of 6% from time of filing this
complaint, and costs
RATIO:
In his defense, Ong Pong Co raised the issue of the closure/failureof the store
by virtue of ejectment proceedings instituted against them. THIS, however, has
no real significance in thedetermination of the merits of this case
To be sure, the whole action is based upon the fact that the ONGSreceived
capital from MARTINEZ for the purpose of organizing astore. The ONGS,
according to the agreement, were to handle thesaid money and invest it in a
store which was the object of theassociation
The ONGS had no special agreement vesting in one sole personthe
management of the business. Thus, both ONGS were theactual administrators
thereof; and as such administrators, theywere the agents of the company and
incurred the liabilitiespeculiar to every agent, among which is that of rendering
account to the principal of their transactions, and paying him everythingthey
may have received by virtue of the mandatum
Since neither of them has rendered such account nor proven thelosses, they
are therefore obliged to refund the money that theyreceived for the purpose of
establishing the said store
There is no evidence presented that the entire capital or any part thereof was
lost. Without proof, the allegation that the effects of the store were ejected is,
as earlier mentioned, of no moment.Even if we assume this to be true, it could
still not be inferred that the ejectment was due to the fact that no rents were
paid, andthat the rent was not paid on account of the loss of the
capitalbelonging to the partnership
With regard to the CFI’s finding of profits, it appears that the same was based
on the statements of Ong Pong Co, to the effect that "there were some profits,
but not large ones." this,however, was never proven. And even we admit the
same, suchstatement still does not make it possible to estimate the
alleged“profits.” As such, the CFI ruling on this point is REVERSED
Inasmuch as in this case nothing appears other than the failure tofulfill an
obligation on the part of a partner who acted as agent inreceiving money for a
given purpose, for which he has renderedno accounting, such agent is
responsible only for the losseswhich, by a violation of the provisions of the law,
he incurred.This being an obligation to pay in cash, there are no other
lossesthan the legal interest, which interest is not due except from thetime of
the judicial demand, or, in the present case, from the filingof the complaint
Art. 1688 is NOT applicable in this case, in so far as it provides"that the
partnership is liable to every partner for the amounts hemay have disbursed on
account of the same and for the properinterest," for the reason that no other
money than that contributed as is involvedArt. 1138, CC is also NOT
applicable here as this deals with debtsof a partnership where the obligation is
NOT joint. Likewise, Art 1723 regarding the liability of two or more agents with
respect tothe return of the money that they received from their principal isNOT
applicable. No showing of solidarity having beenestablished, their liability is
JOINT
Agustin v. Inocencio
FACTS:
The parties, who had been conducting a partnership asindustrial partners
without capital, contributed from its profitsthe sum of P807.28 as a fund toward
the construction of a cascofor use in their business, to which they added
P3,500, borrowedfrom Maria del Rosario, the wife of Inocencio, he being
themanaging partner. It is admitted that this total (a little overP4,300), was the
estimated cost of the casco but in the progressof the work Inocencio found that
it called for additional funds,which he advanced to the amount of P2,024.49.
This amount isnecessary in order to complete the work undertaken. Although it
would seem that he failed to notify his partners of the variousitems from time to
time going to make up this sum, it is shownthat the books were at all times
open to their inspection, and that,being asked to examine them, they omitted
to do so, and that theAgustin, representing all the partners, was also present
at theconstruction of the casco, in charge of the practical work andcognizant of
its needs and its progress.
ISSUE/HELD:
WON Inocencio, in borrowing money andadvancing funds, was acting within
the scope of his authority as amanaging partner.
YES
RATIO:
The work done in the casco having been within the scope of the association
and necessary to carry out its express object,the borrowing of the money
required to carry it on, with theacquiescence if not with the affirmative consent
of hisassociates, was not outside the powers of the managingpartner and
constitutes a debt for which all the associatesare liable.
The note passed into the hands of Inocencio by reason of thesuccessive
deaths of his wife and of their only child, eachwithout debts, and for the
amount thereof he became acreditor, subject, however, to the deduction
therefrom of hisproportionate part of the indebtedness.
The trial court treated his claim as an addition to his capitalin the firm, rather
than as a loan, and this constitutes one of the grounds of error stated by the
appellant. We do not deemit necessary to pass upon this objection, for the
reason that,considered as a loan, this sum would place the defendant asa
creditor in a stronger position as against his associatesthan if regarded as a
mere contribution to capital. The error,if it be an error, is not, therefore,
prejudicial to the plaintiff,but is rather beneficial to him. The respondent did not
except to it.
Various small sums have been paid out of the profits to someof the partners
and these were properly allowed him in thejudgment.
On the theory on which the action was disposed of, the trialcourt committed no
error in the computation of the variousshares.
Of the four parties plaintiff, but one, Victor del Rosario, isinterested in this
appeal, which has been dismissed as to theothers, and as to him the judgment
of the trial court must beaffirmed, with costs of this instance
PIONEER VS CA
Jacob Lim was the owner of Southern Air Lines, a single proprietorship. In 1965,
Lim convinced Constancio Maglana, Modesto Cervantes, Francisco Cervantes,
and Border Machinery and Heavy Equipment Company (BORMAHECO) to
contribute funds and to buy two aircrafts which would form part a corporation
which will be the expansion of Southern Air Lines. Maglana et al then contributed
and delivered money to Lim.
But instead of using the money given to him to pay in full the aircrafts, Lim,
without the knowledge of Maglana et al, made an agreement with Pioneer
Insurance for the latter to insure the two aircrafts which were brought in
installment from Japan Domestic Airlines (JDA) using said aircrafts as security.
So when Lim defaulted from paying JDA, the two aircrafts were foreclosed by
Pioneer Insurance.
It was established that no corporation was formally formed between Lim and
Maglana et al.
ISSUE: Whether or not Maglana et al must share in the loss as general partners.
HELD: No. There was no de facto partnership. Ordinarily, when co-investors
agreed to do business through a corporation but failed to incorporate, a de facto
partnership would have been formed, and as such, all must share in the losses
and/or gains of the venture in proportion to their contribution. But in this case, it
was shown that Lim did not have the intent to form a corporation with Maglana
et al. This can be inferred from acts of unilaterally taking out a surety from
Pioneer Insurance and not using the funds he got from Maglana et al. The record
shows that Lim was acting on his own and not in behalf of his other would-be
incorporators in transacting the sale of the airplanes and spare parts.
ISSUE:
1. Whether Pioneer has a cause of action against respondents.
2. Whether failure to incorporate automatically resulted to de facto partnership.
HELD:1. , Pioneer has no right to institute and maintain in its own name an
action for the benefit of thereinsurers. It is well-settled that an action brought
by an 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
thecomplaint. An attorney-in-fact is not a real party in interest, that there is no
law permitting an action to bebrought by an attorney-in-fact.
2. NO. Partnership inter se does not necessarily exist, for ordinarily persons
cannot be made toassume the relation of partners as between themselves,
when their purpose is that no partnership shall existand it should be implied
only when necessary to do justice between the parties; thus, one who takes no
partexcept to subscribe for stock in a proposed corporation which is never
legally formed does not become apartner with other subscribers who engage
in business under the name of the pretended corporation, so asto be liable as
such in an action for settlement of the alleged partnership and contribution.