Bastida vs Menzi 58 Phil 188 GR No. L-35840, March 31, 1933 Facts: This is an appeal by Menzi & Co.

, Inc., one of the defendants, from a decision of the Court of First Instance of Manila. Bastida offered to assign to Menzi & Co. his contract with Phil Sugar Centrals Agency and to supervise the mixing of the fertilizer and to obtain other orders for 50 % of the net profit that Menzi & Co., Inc., might derive therefrom. J. M. Menzi (gen. manager of Menzi & Co.) accepted the offer. The agreement between the parties was verbal and was confirmed by the letter of Menzi to the plaintiff. Pursuant to the verbal agreement, the defendant corporation on April 27, 1922 entered into a written contract with the plaintiff, marked Exhibit A, which is the basis of the present action. Still, the fertilizer business as carried on in the same manner as it was prior to the written contract, but the net profit that the plaintiff herein shall get would only be 35%. Prior to the expiration of the contract (April 27, 1927), the manager of Menzi notified the plaintiff that the contract for his services would not be renewed. Subsequently, when the contract expired, Menzi proceeded to liquidate the fertilizer business in question. The plaintiff refused to agree to this. It argued, among others, that the written contract entered into by the parties is a contract of general regular commercial partnership, wherein Menzi was the capitalist and the plaintiff the industrial partner. Issue: Is the relationship between the petitioner and Menzi that of partners? Held: The relationship established between the parties was not that of partners, but that of employer and employee, whereby the plaintiff was to receive 35% of the net profits of the fertilizer business of Menzi in compensation for his services for supervising the mixing of the fertilizers. Neither the provisions of the contract nor the conduct of the parties prior or subsequent to its execution justified the finding that it was a contract of co-partnership According to Art. 116 of the Code of Commerce, articles of association by which two or more persons obligate themselves to place in a common fund any property, industry, or any of these things, in order to obtain profit, shall be commercial, no matter what it class may be, provided it has been established in accordance with the provisions of the Code. However in this case, there was no common fund. The business belonged to Menzi & Co. The plaintiff was working for Menzi, and instead of receiving a fixed salary, he was to receive 35% of the net profits as compensation for his services. The phrase in the written contract en sociedad con, which is

used as a basis of the plaintiff to prove partnership in this case, merely means en reunion con or in association with. It is also important to note that although Menzi agreed to furnish the necessary financial aid for the fertilizer business, it did not obligate itself to contribute any fixed sum as capital or to defray at its own expense the cost of securing the necessary credit. Pascual vs. CIR G.R No. 78133 Oct. 18, 1988 Facts: On June 22, 1965, petitioners bought two (2)parcels of land from Santiago Bernardino, et al.and on May 28, 1966, they bought another three (3) parcels of land from Juan Roque. The first two parcels of land were sold by petitioners in 1968 to Marenir Development Corporation, while the three parcels of land were sold by petitioners to Erlinda Reyes and Maria Samson on March 19,1970. Petitioner realized a net profit in the sale made in 1968 in the amount of P165, 224.70, while they realized a net profit of P60,000 in the sale made in 1970. The corresponding capital gains taxes were paid by petitioners in 1973 and 1974 .Respondent Commissioner informed petitioners that in the years 1968 and 1970, petitioners as co-owners in the real estate transactions formed an unregistered partnership or joint venture taxable as a corporation under Section 20(b)and its income was subject to the taxes in the National Internal Revenue Code; that the unregistered partnership was subject to corporate income tax as distinguished from profits derived from the partnership by them which is subject to individual income tax. Issue Whether petitioners formed an unregistered partnership subject to corporate income tax(partnership vs. co-ownership Held: Article 1769 of the new Civil Code lays down the rule for determining when a transaction should be deemed a partnership or a co-ownership. Said article paragraphs 2 and 3, provides: (2) Co-ownership or co-possession does not itself establish a partnership, whether such coowners or co-possessors do or do not share any profits The sharing of returns foes not in itself establish a partnership whether or not the persons sharing therein have a joint or common right or interest in the property. There must be a clear intent to form partnership, the existence of a juridical personality different from the individual partners, and the freedom of each party to transfer or assign the whole property. In the present case, there is clear evidence of coownership between the petitioners. There is no adequate basis to support the proposition that they thereby formed an unregistered partnership. The two isolated transactions whereby they purchased properties and sold the same a few years thereafter did not there by make them

partners. They shared in the gross profits as co- owners and paid their capital gains taxes on their net profits and availed of the tax amnesty thereby. Under the circumstances, they cannot be considered to have formed an unregistered partnership which is thereby liable for corporate income tax, as the respondent commissioner proposes. Gregorio Ortega, Tomas del Castillo, Jr. and Benjamin Bacorro v. CA, SEC and Joaquin Misa G.R. No. 109248 July 3, 1995 Facts: Ortega, then a senior partner in the law firm Bito, Misa, and Lozada withdrew in said firm. He filed with SEC a petition for dissolution and liquidation of partnership. SEC en banc ruled that withdrawal of Misa from the firm had dissolved the partnership. Because since it is partnership at will, the law firm could be dissolved by any partner at anytime, such as by withdrawal there from, regardless of good faith or bad faith, since no partner can be forced to continue in the partnership against his will. Issue: 1. WON the partnership of Bito, Misa & Lozada (now Bito, Lozada, Ortega & Castillo)is a partnership at will; 2. WON the withdrawal of Misa dissolved the partnership regardless of his good or bad faith; Held: 1. Yes. The partnership agreement of the firm provides that [t]he 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. 2. Yes. Any one of the partners may, at his sole pleasure, dictate a dissolution of the partnership at will (e.g. by way of withdrawal of a partner). He must, however, act in good faith, not that the attendance of bad faith can prevent the dissolution of the partnership but that it can result in a liability for damages. Carmen Liwanag v. CA and People 281 SCRA 225 G.R. No. 114398 October 24, 1997 Facts: Liwanag asked Isidora Rosales to join her and Thelma Tagbilaran in the business of buying and 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 would be returned

to Rosales. Rosales gave several cash advances amounting to 633,650. Money was misappropriated. Rosales files a complaint of estafa against them. After trial on the merits, the trial court rendered a decision finding L guilty as charged. On appeal to the Court of Appeals, said decision was affirmed. L then filed her appeal before the Court alleging that the appellate court erred in affirming her conviction for the crime of estafa, when clearly the contract that existed between them was either that of a simple loan or that of a partnership or joint venture, hence purely civil in nature and not criminal. Issue: 1. WON the parties entered into a partnership agreement; 2. if in the negative, WON the transaction is a simple loan? Held: 1. No. Even assuming that a contract of partnership was indeed entered into by and between the parties, when money or property have been received by a partner for a specific purpose for the purchase of cigarette and she 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 the same is transferred. Being the owner, the borrower can dispose of it for whatever purpose he may deem proper Aguila Jr. vs CA G.R. No. 127347 November 25, 1999, 316 SCRA 246 In April 1991, the spouses Ruben and Felicidad Abrogar entered into a loan agreement with a lending firm called A.C. Aguila & Sons, Co., a partnership. To secure the loan, the spouses mortgaged their house and lot located in a subdivision. The terms of the loan further stipulates that in case of non-payment, the property shall be automatically appropriated to the partnership and a deed of sale be readily executed in favor of the partnership. She does have a 90 day redemption period. Ruben died, and Felicidad failed to make payment. She refused to turn over the property and so the firm filed an ejectment case against her (wherein she lost). She also failed to redeem the property within the period stipulated. She then filed a civil case against Alfredo Aguila, manager of the firm, seeking for the declaration of nullity of the deed of sale. The RTC retained the validity of the deed of sale. The Court of Appeals reversed the RTC. The CA ruled that the sale is void for it is a pactum commissorium sale which is prohibited under Art. 2088 of the Civil Code .

ISSUE: Whether or not the case filed by Felicidad shall prosper. HELD: No. Unfortunately, the civil case was filed not against the real party in interest. As pointed out by Aguila, he is not the real party in interest but rather it was the partnership A.C. Aguila & Sons, Co. The Rules of Court provide that every action must be prosecuted and defended in the name of the real party in interest. A real party in interest is one who would be benefited or injured by the judgment, or who is entitled to the avails of the suit. Any decision rendered against a person who is not a real party in interest in the case cannot be executed. Hence, a complaint filed against such a person should be dismissed for failure to state a cause of action, as in the case at bar. Under Art. 1768 of the Civil Code, a partnership has a juridical personality separate and distinct from that of each of the partners. The partners cannot be held liable for the obligations of the partnership unless it is shown that the legal fiction of a different juridical personality is being used for fraudulent, unfair, or illegal purposes. In this case, Felicidad has not shown that A.C. Aguila & Sons, Co., as a separate juridical entity, is being used for fraudulent, unfair, or illegal purposes. Moreover, the title to the subject property is in the name of A.C. Aguila & Sons, Co. It is the partnership, not its officers or agents, which should be impleaded in any litigation involving property registered in its name. A violation of this rule will result in the dismissal of the complaint.

defined in the RPC. When Larin put the P172 into the partnership which her formed with Tarug et. al., he invested his capital in the risks or benefits of the business of the purchase and sale of mangoes, and, even though he had reserved the capital and conveyed only the usufruct of his money, it would not devolve upon one of his three partners to return the his capital to him, but upon the partnership of which he himself formed part, or if it were to be done by one of the three specifically, it would be Tarug, who according to the evidence was the person who received the money directly from Larin. The P172 having been received by the partnership, the business commenced and profits accrued, the action that lies with the partner who furnishes the capital for the recovery of his money is not a criminal action for estafa, but a civil one arising from the partnership contract for a liquidation of the partnership and a levy on its assets if there should be any. Goquilay vs. Sycip, 9 SCRA 663 FACTS: Facts: Tan Sin An and Antonio Goquiolay entered into a general commercial partnership which was to last for 10 years for the purpose of dealing in real-estate. The agreement lodged upon Tan Sin An the sole management of the partnership affairs and his co partner, Goquiolay, has no voice or participation in the management of the affairs of the co partnership. They further agreed upon that in the event of the death of any of the partners at any time before the expiration of the term, the co partnership shall not be dissolved but will have to be continued and the deceased partner shall be represented by his heirs or assigns in the said co partnership. A general power of attorney (GPA) was executed by Goquiolay in favor of Tan Sin An which included buy, sell, alienate and convey properties of the partnership as well as obtain loans as he maydeem advisable for the best interest of the co partnership. With the authority of the GPA, thepartnership through Tan Sin An purchased 3 parcels of land which was mortgaged to La Urbana Sociedadand another 46 parcels of land which which were purchased by Tan Sin An in his individual capacity,and assumed mortgaged debt thereon. The down payment for the 46 parcels of land was advanced by Yutivo and Co. The two separate obligations were consolidated in an instrument executed by the partnership and Tan Sin An,whereby the entire 49 lots were mortgaged in favorof the Banco Hipotecario de Filipinas (as successor toLa Urbana). When Tan Sin An died, his wife KongChia Pin was appointed administratix of the intestate estate of her deceased husband. Repeated demands for payment were made by Banco Hipotecario on thepartnership and on Tan Sin An which was initially paid by Yutivo and Co. and Sing Yee Cuan and Co. The matter now pending is the appellant's motion for
reconsideration of our main decision, wherein we have upheld the validity of the sale of the lands owned by the partnership Goquiolay & Tan Sin An, made in 1949 by the widow of the managing partner, Tan Sin An (Executed in her dual capacity as Administratrix of the husband's estate and as partner in lieu of the husband), in favor of the buyers Washington Sycip and Betty Lee.

US vs Clarin 17 Phil 84, 1910 Facts: Pedro Clarin had an agreement to form a partnership and the divide the profits equally to Pedro Tarug, Eusebia Clarin, and Carlos De Guzman. Larin delivered to Tarug P172, as his contribution to the partnership, to buy and sell mangoes. Tarug, Clarin, and De Guzman were able to obtain P203 from the business of buying and selling mangoes but the three did not comply with the terms of the contract of delivering to Larin his half of the profits neither did they render him any account of the capital. Larin charged them with the crime of estafa but the provincial fiscal filed an information only against Eusebio Clarin in which the trial court sentenced the defendant to six months arresto mayor and return Pedro Larin P172 and P30.50 which is his share of the profits. The defendant appealed. Issue: W/N a partner in a partnership may be charged with estafa. Held: NO. The failure on the part of the industrial partners to return to the capitalist partner the capital brought into the partnership by the latter is not an act constituting the crime of estafa as

ISSUE: W/N the consent of the other partner was necessary to perfect the sale of the partnership properties to Sycip and Betty NO. HELD: Strangers dealing with a partnership have the right to assume, in the absence of restrictive clauses in the co partnership agreement, that every general partner has the power to bind the partnership and has the requisite authority from his co partners. However, consonant with the articles of co partnership providing for the continuation of the firm notwithstanding the death of one of the partners, the heir of the deceased, by never repudiating or refusing to be bound under said provision, became individual partner with Goquiolay upon Tans demise. By allowing Kong Chai Pin to retain control of the partnership properties from 1942 to 1949, Goquiolay is estopped from denying her legal representation of the partnership, with the power to bind it with proper contracts. By authorizing the widow of the managing partner to manage partnership property (which a limited partner could not be authorized to do), the other general partner recognized her as a general partner, and is now in estoppel to deny her position as a general partner, with authority.

was acting on his own and not in behalf of his other would be incorporators in transacting the sale of aircrafts and spare parts. Persons who attempt but fail to form a corporation and who carry on business under the corporate name occupy the position of partners inter se. HOWEVER, such relation does not necessarily exist, for ordinarily, persons cannot be made to assume the relation of partners as between themselves when their purpose is that no partnership shall exist. In the instant case, it is clear that Lim never intended to form a corporation with respondents despite his representations to them, giving credence to the crossclaims of respondents saying that they were induced and lured to make contributions to a proposed corporation which was never formed because petitioner reneged on their agreement.

PIONEER INSURANCE & SURETY CORP VS. CA Facts: Petitioner Jacob Lim, owner-operator of Southern Airlines (SAL) entered in to a contract with Japan Domestic Airlines (JDA) for the sale and purchase of 2 aircrafts and 1 set of spare parts for $109k to be paid in installments. Pioneer Insurance as surety executed and issued its surety bond in favor of JDA on behalf of its principal Lim for the balance. Border Machinery and Heavy Equip. Co. (BorMaHeCo), Francisco and Modesto Cervantes and Maglana gave some funds used in the purchase or aircrafts and spare parts as contribution to new corporation proposed by Lim to expand his airline business. They executed 2 indemnity agreements stipulating that the indemnitors principally agree and bind themselves solidarily to indemnify, hold and save Pioneer from damages, losses, costs, taxes, penalties, etc. which Pioneer may incur from becoming surety. Lim, (acting under SAL), executed in favor of pioneer a deed of chattel mortgage as security, stipulating that Lim was to transfer and convey to the surety the 2 aircrafts. Lim defaulted on installment payments and JDA asked Pioneer to pay, which Pioneer did in the amount of P298k. Pioneer filed for extrajudicial foreclosure of chattel mortgage (to which Cervanteses and Maglana filed a 3rd party claim alleging co-ownership over aircrafts) and judicial foreclosure with writ of prelim attachment against Lim, Cervanteses, Bormaheco and Maglana. Trial Court held that Lim was liable and dismissed Pioneers claim against all other defendants. ISSUE: Was there a de facto partnership created among Cervantes, Maglana and Lim as a result of their failure to incorporate? HELD. No de facto partnership was created among the parties which would entitle the petitioner to a reimbursement of the supposed losses of the proposed corporation. Petitioner