Bastida v. Menzi & Co.

58 Phil. 188
Ponente: Vickers, J.
Facts:
J.M. Menzi, together with his wife and
daughter, owns 99% of the capital stock of
the Menzi & Co., Inc. Menzi & Co., Inc. has
been engaged in the general merchandise
business in the Philippines including
importation and sale of all kinds of goods,
wares, and merchandise, especially simple
fertilizer and fertilizer ingredients. Francisco
Bastida claims that he was a partner of
Menzi & Co., Inc.. As a partner, Bastida
claims that he is entitled to a share of the
goodwill used in the fertilizer business

during the time that he was connected with

the corporation but the Menzi & Co., Inc.
had appropriate the same for its own use
without giving Bastida his appropriate share
in the net profits. For its part, Menzi & Co.,
Inc claims that Bastida only entered into an
employment agreement with them for a
compensation of 35% of the sale of the
fertilizers prepared by Bastida. After the
termination of the agreement between the
parties, Menzi & Co., Inc told Bastida that
they will still collect the accounts receivable
and disposed of the stocks on hand before
Bastida could obtain his share. However,
Bastida refused to accept the accounting
made by the corporation and was
disgruntled because the corporation refused
to continued his services.

Issue: Whether there exists an agreement

of partnership between the parties
Held:
The Court held that the relationship
established between Menzi & Co. and by
Bastida was to receive 35% of the net
profits of the fertilizer business of Menzi &
Co., Inc. for the compensation for his
services of supervising the mixing of the
fertilizers. In the present case, there was no
agreement to establish a relations as
partners as there was no common fund to
speak of. The business belonged to menzi
& Co. while Bastida was working for the
former. However, Bastida mantains, as a
basis of the goodwill that the trademarks

used in the fertilizer business during the

time that he was connected with it acquired
great value, and that they have been
appropriated by the appellant to its own
use. The Court asserts on this claim that
the trademarks used were not new since
they have been used by Menzi & Co and
were registered in its own name.
Estanislao, Jr. v. CA
160 SCRA 830
Ponente: Gancayco, J.
Facts:
Petitioner Elegio Estanislao and Private
respondents Remedios Estanislao, Emilio
Estanislao, and Leocadio Santiago are

brothers and sisters who are co-owners of

certain lots being leased to the Shell
Company of the Philippines Limited
(SHELL). The parties agreed to open and
operate a gas station on their common lot to
be known as Estanislao Shell Service
Station. Under the Joint Affidavit and
Additional Cash Pledge Agreement, the
initial investment will be taken from the
advance rentals due to them from Shell
worth 15,000.00. Because of the company
policy of Shell that there should only be one
dealer of the Shell products, the siblings
agreed to allow petitioner to operate and
manage the gasoline station of the family.
For sometime, Elegio submitted financial
statements regarding the operation of the
business to private respondents but

thereafter petitioner failed to render

subsequent accounting. Petitioner claims
that there was no partnership established
by them on the ownership and operation of
the gasoline service station business.
Issue: Whether a partnership exists
between members of the same family
arising from their joint ownership of certain
properties.
Held:
The Court held that the evidence in the
record shows that there was in fact a
partnership agreement between the parties.
As shown by the evidence, petitioner
submitted to private respondents periodic
accounting of the business; petitioner gave

a written authority to private respondent

Remedios to examine and audit the books
of their common business (among
negosyo); and respondent Remedios
assisted in the running of the business. The
sole dealership by petitioner and the
issuance of all government permits and
licenses in the name of petitioner was in
compliance with the company policy of
Shell and the understanding of the parties
of having only one dealer of the Shell
products.
Sy v. CA
398 SCRA 301
Ponente: Quisumbing, J.
Facts:

Private respondent Jaime Sahot worked as

truck helper fro Vicente Sy Trucking since
1958. In 1965, Sahot became a truck driver
of the same business that was renamed to
T. Paulino Trucking Service, later 6B's
Trucking Corporation in 1985 and thereafter
known as SBT Trucking Corporation since
1994. In April 1994, Sahot who was already
59 years old filed for a month long leave
after being diagnosed with several
diseases. However, petitioners threatened
him of termination should he refused to go
back to work. Sahot was then terminated
and ended up sick, jobless and penniless.
Sahot filed the National labor Relations
Commission a complaint for illegal
dismissal against petitioners. Petitioners

claim that petitioner was an industrial

partner. Petitioners further alleged that
Sahot never reported back to work after the
expiration of his authorized leave of
absence, hence he was deemed to have
voluntarily resigned from his work.
Issue: Whether an employer-employee
relationship or a partnership existed
between petitioners and respondent Sahot
Held:
The Court held that the elements to
determine the existence of an employment
relationship are: 1. the selection and
engagement of the employee; 2. the
payment of wages; 3. the power of
dismissal; and 4. the employers power to

control the employees conduct not only as

to the result of the work to be done, but also
as to the means and methods to
accomplish it. The records of the case show
that respondent Sahot actually engaged in
work as an employee. During the entire
course of his employment he did not have
the freedom to determine where he would
go, what he would do, and how he would do
it. He merely followed instructions of
petitioners and was content to do so, as
long as he was paid his wages. The Court
argued against the existence of a
partnership as alleged by the petitioners by
stating that under Article 1767 of the Civil
Code, in a contract of partnership two or
more persons bind themselves to contribute
money, property or industry to a common

fund, with the intention of dividing the profits

among themselves; not one of these
circumstances is present in this case.

Heirs of Jose Lim v. Lim

614 SCRA 141
Ponente: Nachura, J.
Facts:
The petitioners in the case are the Heirs of
Jose Lim who filed a complaint for partition,
accounting and damages against
respondent Juliet Villa Lim alleging that
Jose Lim was the partner of Jimmy Yu and
Norberto Uy in a trucking business formed
in 1980. Respondent claimed that it was his

husband, Elfledo Lim, who was the partner

of Norberto and Jimmy in the trucking
business. Respondent averred that Jose
Lim who was the father of Elfledo Lim gave
him 50,000 pesos in 1980 as a capital in an
informal partnership with Jimmy and
Norberto. There is no contract of
partnership or articles of partnership that
would have been the best evidence of the
existence of the partnership as such the
petitioners relied on the testimony of Jimmy
Uy that Jose Lim was the partner of
petitioner while respondent presented
records and documents for its defense.
Issue: Whether Jose Lim or Elfledo Lim was
the partner of Jimmy Yu and Norberto Uy in
the trucking business

Held:
The Court held that the evidence of the
case shows that Elfledo and not Jose was
the partner in the partnership with Nortberto
and Jimmy. Applying the legal provision of
Article 1769 of the Civil Code, the following
circumstances tend to prove that Elfledo
was himself the partner of Jimmy and
Norberto: 1) Cresencia testified that Jose
gave Elfledo P50,000.00, as share in the
partnership, on a date that coincided with
the payment of the initial capital in the
partnership; (2) Elfledo ran the affairs of the
partnership, wielding absolute control,
power and authority, without any
intervention or opposition whatsoever from
any of petitioners herein; (3) all of the

properties, particularly the nine trucks of the

partnership, were registered in the name of
Elfledo; (4) Jimmy testified that Elfledo did
not receive wages or salaries from the
partnership, indicating that what he actually
received were shares of the profits of the
business;and (5) none of the petitioners, as
heirs of Jose, the alleged partner,
demanded periodic accounting from Elfledo
during his lifetime. Moreover, the Court held
that if Jose Lim was indeed the partner in
the partnership then upon his death the
partnership should have been dissolved
and its assets liquidated. The same did not
occur in the instant case, the partnership
even flourished through Elfredo's efforts
and handwork.

Arbes v. Polistico
53 Phil. 489
Ponente: Villamor, J.
Facts:
The case is an action to bring about the
liquidation of the funds and property of the
association called "Tunuhan Polistico &
Co.". The plaintiffs were members or
shareholders while the defendants were
designates as president-treasurer, directors
and secretary of the said association. The
lower court held that the association is
unlawful and that the defendants should

return the amount of 24,607.80 to the

plaintiffs representing their contributions to
the association. The defendants claim that
since the association was adjudged to be
unlawful, the plaintiffs cannot recover their
contributions because the same will be turn
over to a charitable institution following the
provision of Article 1666,
Issue: Whether the plaintiffs as members
and shareholder have the right to recover
their contributions to an unlawful
association.
Held:
The Court held that the plaintiffs limit
themselves to demanding only the amount
contributed by them hence they need not

resort to the partnership contract on which

to base that action. As such, when a
partner makes his contribution, which
passes to the managing partner for the
purpose of carrying on the business or
industry but the said business was
adjudged unlawful and the said contract of
partnership does note exist in the eyes of
the law, the partners who has paid in his
share is entitled to recover it. This is not the
case with regard to profits earned in the
course of the partnership because they do
not constitute the partner's contribution but
are result of the industry. Hence, in order to
demand the proportional part of the said
profits, the partner/s would have to base his
action on the contract which is null and
void, it cannot give rise to the necessary

action. Upon the dissolution of the

partnership it shall be given to the
charitable institution of the domicile of the
partnership, or in default of such, to those
of the province.

Woodhouse v. Halili
93 Phil. 526
Ponente: Labrador, J.
Facts:
Charles Woodhouse entered into a written
agreement with Fortunato Halili whereby,
they agreed to organize a partnership for

the bottling and distribution of Mission Soft

Drinks in the Philippines. Under the
agreement, Woodhouse will received 30%
of the net profits of the business as
industrial partner. Prior to entering the
agreement, Woodhouse informed Halili that
he will obtain exclusive franchise rights from
Mission Dry Corporation of Los Angeles
California, USA. Woodhouse was granted a
30 day exclusive bottling and distribution
rights for the Philippines. When the contract
of partnership between Halili and
Woodhouse was signed, they both end to
the United States for the franchise
agreement with Mission Dry Corporation.
During the operations of the corporation,
Woodhouse demanded that the partnership
papers be executed but Halili refused to do

so.
Issue:
1. Whether Woodhouse had falsely
represented that he had an exclusive
franchise to Mission Beverages;
2. Whether such false representation would
vitiate the contract.
Held:
1. Anent the first issue, the Court held that
Woodhouse made false representations
through his own letters and testimony. Halili
was made to believe that Woodhouse was
the grantee of an exclusive franchise, thus
causing Halili to enter into the agreement.
2. On the second issue, in order that fraud

may vitiate consent, it must be causal and

not merely incidental inducement to the
making of the contract. The representation
made by Woodhouse did not vitiate the
consent of Halili but the representation was
used by Woodhouse to obtain a 30% share
of the net profits from the partnership.
Therefore, Halili cannot be compelled
against his will to carry out the agreement
nor execute the partnership papers
because what he has was an obligation to
do, not to give. Being an acto personalismo,
Halili is granted by law freedom or liberty to
do the act or not to do it as he pleases
without the court compelling him to take any
course of action for such would constitute
an act of violence.

Litonjua v. Litonjua
477 SCRA 576
Ponente: Garcia, J.

Facts:
Aurelio Litonjua Jr. and Eduardo Litonjua,
Sr. are bothers whose legal dispute started
on when Aurelio filed a suit against his
brother Eduardo, Robert Yang and several
corporations for specific performance and
accounting. Aurelio alleged in his complaint
that he and his brother together with Yang
entered into a joint venture or partnership
arrangement in the Odeon Theater
business. The joint venture/partnership was

for the continuation of the brothers' daily

business and common family funds
whereby the common fund is constituted
from the share of the brothers in their family
business. Aurelio presented a
memorandum as an embodiment of the
contract of partnership and several
actionable documents to which he
predicated his right as a partner. On the
other hand, Eduardo claimed that there was
no partnership nor joint venture constituted
between him and his brother.
Issue: Whether the actionable documents
depict the contract of partnership or joint
venture.
Held:

The actionable document is null and void

for purposes of establishing the existence of
a valid contract of partnership because of
the failure to comply with the essential
formalities of a valid contract. The said
documents were unsigned and undated, an
unsigned document does not meet the
public instrument requirements under
Article 1771 of the Civil Code and the same
cannot be registered with the Securities and
Exchange Commission as required under
Article 1772 of the Civil Code. It is also
alleged by Aurelio that his contributions to
the common fund of the alleged partnership
were his share in the family business, which
are primarily immovable properties. In as
much as immovable properties were
contributed to the common fund of the

partnership, the inventory requirement

under Article 1773 of the Civil Code must
have been observed.