EVANGELISTA vs.

ESTRELLA ABAD SANTOS

On October 9, 1954 a co-partnership was formed under the name of "Evangelista &
Co." On June 7, 1955 the Articles of Co-partnership was amended as to include
herein respondent, Estrella Abad Santos, as industrial partner, with herein
petitioners Domingo C. Evangelista, Jr., Leonardo Atienza Abad Santos and Conchita
P. Navarro, the original capitalist partners, remaining in that capacity, with a
contribution of P17,500 each. The amended Articles provided, inter alia, that "the
contribution of Estrella Abad Santos consists of her industry being an industrial
partner", and that the profits and losses "shall be divided and distributed among the
partners ... in the proportion of 70% for the first three partners, Domingo C.
Evangelista, Jr., Conchita P. Navarro and Leonardo Atienza Abad Santos to be divided
among them equally; and 30% for the fourth partner Estrella Abad Santos."
On December 17, 1963 herein respondent filed suit against the three other partners
in the Court of First Instance of Manila, 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 and let her examine the partnership books or to give her information
regarding the partnership affairs to pay her any share in the dividends declared by
the partnership. She therefore prayed that the defendants be ordered to render
accounting to her of the partnership business and to pay her corresponding share in
the partnership profits after such accounting, plus attorney's fees and costs.
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 byway 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;
and that her share of 30% was to be based on the profits which might be realized by
the partnership only until full payment of the loan which it had obtained in
December, 1955 from the Rehabilitation Finance Corporation in the sum of P30,000,
for which the plaintiff had signed a promisory note as co-maker and mortgaged her
property as security.
"whether the plaintiff-appellee (respondent here) is an industrial partner
One cannot read appellee's testimony just quoted without gaining the very definite
impression that, even as she was and still is a Judge of the City Court of Manila, she
has rendered services for appellants without which they would not have had the
wherewithal to operate the business for which appellant company was organized.
Article 1767 of the New Civil Code which provides that "By 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, 'does
not specify the kind of industry that a partner may thus contribute, hence the said
services may legitimately be considered as appellee's contribution to the common
fund.

ISABELO MORAN vs. THE HON. COURT OF APPEALS

on February 22, 1971 Pecson and Moran entered into an agreement whereby both
would contribute P15,000 each for the purpose of printing 95,000 posters (featuring
the delegates to the 1971 Constitutional Convention), with Moran actually
supervising the work; that Pecson would receive a commission of P l,000 a month
starting on April 15, 1971 up to December 15, 1971; that on December 15, 1971, a
liquidation of the accounts in the distribution and printing of the 95,000 posters
would be made, that Pecson gave Moran P10,000 for which the latter issued a
receipt; that only a few posters were printed; that on or about May 28, 1971, Moran
executed in favor of Pecson a promissory note in the amount of P20,000 payable in
two equal installments (P10,000 payable on or before June 15, 1971 and P10,000
payable on or before June 30, 1971), the whole sum becoming due upon default in
the payment of the first installment on the date due, complete with the costs of
collection.
From the evidence presented it is clear in the mind of the court that by virtue of the
partnership agreement entered into by the parties-plaintiff and defendant the
plaintiff did contribute P10,000.00, and another sum of P7,000.00 for the Voice of
the Veteran or Delegate Magazine. Of the expected 95,000 copies of the posters,
the defendant was able to print 2,000 copies only authorized of which, however,
were sold at P5.00 each. Nothing more was done after this and it can be said that
the venture did not really get off the ground. On the other hand, the plaintiff failed
to give his full contribution of P15,000.00. Thus, each party is entitled to rescind the
contract which right is implied in reciprocal obligations under Article 1385 of the
Civil Code whereunder 'rescission creates the obligation to return the things which
were the object of the contract ...
The petitioner on the other hand admitted in his answer the existence of the
partnership.
The rule is, when a partner who has undertaken to contribute a sum of money fails
to do so, he becomes a debtor of the partnership for whatever he may have
promised to contribute (Art. 1786, Civil Code) and for interests and damages from
the time he should have complied with his obligation
In this case, however, there was mutual breach. Private respondent failed to give his
entire contribution in the amount of P15,000.00. He contributed only P10,000.00.
The petitioner likewise failed to give any of the amount expected of him. He further
failed to comply with the agreement to print 95,000 copies of the posters. Instead,
he printed only 2,000 copies.
Being a contract of partnership, each partner must share in the profits and losses of
the venture. That is the essence of a partnership

the net profits amount to only P6,000.00. This net profit of P6,000.00 should be
divided between the petitioner and the private respondent. And since only
P4,000.00 was undesirable by the petitioner in printing the 2,000 copies, the
remaining P6,000.00 should therefore be returned to the private respondent.
WHEREFORE, the petition is GRANTED. The decision of the respondent Court of
Appeals (now Intermediate Appellate Court) is hereby SET ASIDE and a new one is
rendered ordering the petitioner Isabelo Moran, Jr., to pay private respondent
Mariano Pecson SIX THOUSAND (P6,000.00) PESOS representing the amount of the
private respondent's contribution to the partnership but which remained unused;
and THREE THOUSAND (P3,000.00) PESOS representing one half (1/2) of the net
profits gained by the partnership in the sale of the two thousand (2,000) copies of
the posters, with interests at the legal rate on both amounts from the date the
complaint was filed until full payment is made.