obligations to dissolution

8/13/2019 Obligations to Dissolution

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PARTNERSHIP and AGENCYJarantilla, for the accounting of the assets and income ofthe co-ownership, for its partition and the delivery of her share corresponding to eightpercent (8%), and for damages. Antonieta claimed that in 1!", she had entered intoan agreement with the defendants to engage in #usiness through the e$ecution of adocument denominated as Ac&nowledgement of 'articipating apital. Antonieta also

alleged that she had helped in the management of the #usiness they co-owned withoutreceiving any salary. Antonieta further claimed co-ownership of certain properties (thesu#*ect real properties) in the name of the defendants since the only way thedefendants could have purchased these properties were through the partnership asthey had no other source of income. +he respondents did not deny the e$istence andvalidity of the Ac&nowledgement of 'articipating apital and in fact used this asevidence to support their claim that Antonietas 8% share was limited to the #usinessesenumerated therein. +he respondents denied using the partnerships income topurchase the su#*ect real properties. uring the course of the trial at the +, petitioner/ederico Jarantilla, Jr., who was one of the original defendants, entered into acompromise agreement10 with Antonieta Jarantilla wherein he supported Antonietas

claims and asserted that he too was entitled to si$ percent ("%) of the supposedpartnership in the same manner as Antonieta was.

22345

6hether or not the partnership su#*ect of the Ac&nowledgement of 'articipating apitalfunded the su#*ect real properties.

745

3nder Article 10"0 of the ivil ode, there are two essential elements in a contract ofpartnership5 (a) an agreement to contri#ute money, property or industry to a common

fund9 and (#) intent to divide the profits among the contracting parties. +he first elementis undou#tedly present in the case at #ar, for, admittedly, all the parties in this case haveagreed to, and did, contri#ute money and property to a common fund. 7ence, the issuenarrows down to their intent in acting as they did. t is not denied that all the parties inthis case have agreed to contri#ute capital to a common fund to #e a#le to later onshare its profits. +hey have admitted this fact, agreed to its veracity, and even su#mittedone documentary evidence to prove such partnership - the Ac&nowledgement of'articipating apital. +he petitioner himself claims his share to #e "%, as stated in theAc&nowledgement of 'articipating apital. 7owever, petitioner fails to reali:e that thisdocument specifically enumerated the #usinesses covered #y the partnership5 ;anilaAthletic 2upply, emotigue +rading in loilo ity and emotigue +rading in ota#ato

ity. 2ince there was a clear agreement that the capital the partners contri#uted went tothe three #usinesses, then there is no reason to deviate from such agreement and go#eyond the stipulations in the document. +here is no evidence that the su#*ect realproperties were assets of the partnership referred to in the Ac&nowledgement of'articipating apital. 'etition denied.
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"? ;arch @, >?1?

742 / J24 ;, represented #y 44=+ ;, 'etitioners,

vs.

J34+ BA ;, espondent.

4 2 =

=A73A, J.5

/acts5

'etitioners are the heirs of the late Jose im (Jose). +hey filed a omplaint for 'artition,Accounting and amages against respondent Juliet Billa im (respondent), widow of the

late 4lfledo im (4lfledo), who was the eldest son of Jose and resencia.

Jose, together with his friends, formed a partnership to engage in the truc&ing #usiness.Jose managed the operations of this truc&ing #usiness until his death. +hereafter,JoseCs heirs, including 4lfledo, and partners agreed to continue the #usiness under themanagement of 4lfledo.

'etitioners also alleged that 4lfledo was never a partner or an investor in the #usinessand merely supervised the purchase of additional truc&s using the income from thetruc&ing #usiness of the partners.

4lfledo died, leaving respondent as his sole surviving heir. 'etitioners claimed thatrespondent too& over the administration of the aforementioned properties, which#elonged to the estate of Jose, without their consent and approval.

espondent claimed that 4lfledo was himself a partner of =or#erto and Jimmy.espondent also claimed that per testimony of resencia, Jose gave 4lfledo'D?,???.?? as the latterCs capital in an informal partnership with Jimmy and =or#erto.

espondent also alleged that when Jose died, he left no &nown assets, and the

partnership with Jimmy and =or#erto ceased upon his demise.

n essence, petitioners argue that according to the testimony of Jimmy, the solesurviving partner, 4lfledo was not a partner9 and that he and =or#erto entered into apartnership with Jose.


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ssue5

6as there a partnershipE

7eld5

6e find that the instant 'etition is #ereft of merit.

A partnership e$ists when two or more persons agree to place their money, effects,la#or, and s&ill in lawful commerce or #usiness, with the understanding that there shall#e a proportionate sharing of the profits and losses among them. A contract ofpartnership is defined #y the ivil ode as one where two or more persons #indthemselves to contri#ute money, property, or industry to a common fund, with theintention of dividing the profits among themselves.

3ndou#tedly, the #est evidence would have #een the contract of partnership or thearticles of partnership. 3nfortunately, there is none in this case, #ecause the allegedpartnership was never formally organi:ed. =onetheless, we are as&ed to determine who#etween Jose and 4lfledo was the partner in the truc&ing #usiness.

4lfledo was not *ust a hired help #ut one of the partners in the truc&ing #usiness, activeand visi#le in the running of its affairs from day one until this ceased operations uponhis demise. +he e$tent of his control, administration and management of the partnershipand its #usiness, the fact that its properties were placed in his name, and that he wasnot paid salary or other compensation #y the partners, are indicative of the fact that4lfledo was a partner and a controlling one at that. t is apparent that the other partners

only contri#uted in the initial capital #ut had no say thereafter on how the #usiness wasran. 4vidently it was through 4lfredos efforts and hard wor& that the partnership wasa#le to acFuire more truc&s and otherwise prosper. 4ven the appellant participated inthe affairs of the partnership #y acting as the #oo&&eeper sans salary.1avvphi1

t is nota#le too that Jose im died when the partnership was #arely a year old, and thepartnership and its #usiness not only continued #ut also flourished. f it were true that it

was Jose im and not 4lfledo who was the partner, then upon his death the partnershipshould have #een dissolved and its assets liFuidated. n the contrary, these were notdone #ut instead its operation continued under the helm of 4lfledo and without anyparticipation from the heirs of Jose im.

Philex Mining Corp v CIR Baldr

/acts5 'etitioner 'hile$ entered into an agreement with Gaguio


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losses over the years, which resulted in petitioners withdrawal as manager of the mine.+he parties e$ecuted a Hompromise ation in 'ayment, wherein the de#t of Gaguioamounted to 'hp. 11>,1@",???.??. 'etitioner deducted said amount from its grossincome in its annual ta$ income return as Hloss on the settlement of receiva#les fromGaguio


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in another lending #usiness which competes with their partnership hence Ia#at wase$pelled.

+he two continued with the partnership and they too& with them =ieves hus#and,Arsenio, who #ecame their loan investigator.

ater, 2antos accused the spouses of not remitting


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NAT-RE, 'etition for review on certiorari

P%NENTE, YNARES#.SANTIAG%,J.

/ACTS,'etitioner 6illiam Gelo introduced respondent =enitaAnay to petitioner

;ar*orie +ocao, who conveyed her desire to enter into a *ointventure with her for the

importation and local distri#ution of &itchen coo&wares. 3nder the *oint venture, Geloacted as capitalist, +ocao aspresident and general manager, and Anay as head of themar&eting department and later, vice-Lpresident for sales. +he parties agreed touseAnayCs name in securing distri#utorship of coo&ware from 6est Gend ompany, amanufacturer of &itchen coo&wares in 6isconsin, 3.2.A. +heparties agreed further thatAnay would #e entitled to5 (1) ten percent (1?%) of the annual net profits of the#usiness9 (>) overridingcommission of si$ percent ("%) of the overall wee&ly production9(@) thirty percent (@?%) of the sales she would ma&e9 and (!) two percent(>%) for her

demonstration services. +he agreement was not reduced to writing on the strength ofGeloCs assurances that he was sincere,dependa#le and honest when it came to financialcommitments. Anay having secured the distri#utorship of coo&ware products from the6estGend ompany and organi:ed

the administrative staff and the sales force, the coo&ware #usiness too& offsuccessfully. +hey operated underthe name of ufino Guilding,Ayala Avenue,;a&ati ity. Gelo made good his monetary commitments to Anay. ncto#er , 180, Anay learned that ;ar*orie +ocao had signed a letteraddressed to theu#ao sales office to the effect that she was no longer the vice-L president of


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ISS-ES,6hether or not a partnership e$ists

HE0+ 1RATI%2R-0ING,

es. +he issue of whether or not a partnership e$ists is a factual matter which is withinthe e$clusive domain of #oth the trial andappellate courts. +his ourt cannot set asidefactual findings of such courts a#sent any showing that there is no evidence to supporttheconclusion drawn #y the courta Fuo.

n this case, #oth the trial court and the ourt of Appeals are one in ruling thatpetitioners and privaterespondent esta#lished a #usiness partnership. +his ourt findsno reason to rule otherwise. +o #e considered a *uridical personality, apartnership mustfulfill these reFuisites5 (1) two or more persons #ind themselves

to contri#ute money, property or industry to a commonfund9 and (>) intention on the

part of the partners to divide the profits among themselves.

t may #e constituted in any form9 a pu#licinstrument is necessary only

where immova#le property or real rights are contri#uted thereto.

+his implies that since a contract of partnership is consensual, an oral contract ofpartnership is as good as a written one. 6here no immova#le property or real rightsareinvolved, what matters is that the parties have complied with the reFuisites of apartnership. +he fact that there appears to #e no record in the2ecurities and 4$change

ommission of a pu#lic instrument em#odying the partnership agreement pursuant toArticle 100> of the ivil ode did not cause the nullification of the partnership. +hepertinent provision of the ivil ode on the matter states5Art. 10"8. +he partnership hasa *uridical personality separate and distinct from that of each of the partners, even incase of failure to complywith the reFuirements of article 100>, first paragraph.

+ISP%SITI%N,

3HERE/%RE, the instant petition for review on certiorari is 4=4. +hepartnership among petitioners and private respondent is ordered dissolved, and theparties are ordered to effect the winding up and liFuidation of the partnershippursuant to the pertinent provisions of the ivil ode. +his case is remanded to theegional +rial ourt for proper proceedings relative to said dissolution. +he appealed

decisions of the egional +rial ourt and the ourt of Appeals are A//;4with ;/A+=2, as follows -L-L-L

1. 'etitioners are ordered to su#mit to the egional +rial ourt a formal account of thepartnership affairs for the years 180 and 188, pursuant to Article 18? of the ivilode, in order to determine private respondents ten percent (1?%) share in the netprofits of the partnership9


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>. 'etitioners are ordered, *ointly and severally, to pay private respondent five percent(D%) overriding commission for the one hundred and fifty (1D?) coo&ware sets availa#lefor disposition since the time private respondent was wrongfully e$cluded from thepartnership #y petitioners9

@. 'etitioners are ordered, *ointly and severally, to pay private respondent overridingcommission on the total production which, for the period covering January 8, 188 to/e#ruary D, 188, amounted to '@>,???.??9

!. 'etitioners are ordered, *ointly and severally, to pay private respondent moraldamages in the amount of 'D?,???.??, e$emplary damages in the amount of'D?,???.?? and attorneys fees in the amount of '>D,???.??.

4%TE, 1st division. Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ.,concur.

A/ISC% Insran"e Corporation v5 CA # Mi6e'ursuant to Hreinsurance treaties, a num#er of local insurance firms formed themselvesinto aHpool in order to facilitate the handling of #usiness contracted with a non residentforeignreinsurance company.

After assessing their su#mitted financial statement, the G ommissioner reFuiredthem to pay deficiency ta$es on the ground that they have formed an unregisteredpartnership ta$a#le as a corporation

MMMA/25 there was no partnership

N +he reinsurance policies were written #y them individually and separately

N +heir lia#ility was limited to the e$tent of their allocated share in the original ris&sthusreinsured

N +hey did not share the same ris& or solidary lia#ility

N +here was no common fund

N +he e$ecutive #oard of the pool did not e$ercise control and management of itsfunds,unli&e the #oard of directors of a corporation

N +he pool or clearing house was not and could not possi#ly have engaged in the

#usinessof reinsurance from which it could have derived income for itselfMMMA5 a partnership was formed

Isse, 6= the pool or clearing house was a partnership or association su#*ect to ta$as a corporation


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Held, es, it is. +he 'hilippine legislature included in the concept of corporations thoseentities that resem#led them such as unregistered partnerships and associations.

N 'arenthetically, the =s inclusion of such entities in the ta$ on corporations wasmade even clearer #y the +a$ eform Act of 10, which amended the +a$ ode

25 the term partnership includes syndicate, group, pool, *oint venture andotherunincorporated organi:ation, through or #y means of which any #usiness, financialoperation, orventure is carried on (4vangelista v. ollector of nternal evenue)

Art. 10"0 of the ivil ode5 reFuisite of a contract of partnership +wo or more personsmutually contri#ute to a common fund 6ith the intention to divide the profits amongthemselves

E4ANGE0ISTA v CIR 789: # Mi6e

'etitioners #orrowed sum of money from their father and together with their ownpersonal funds they used said money to #uy several real properties. +hey thenappointed their #rother (2imeon) as manager of the said real properties with powersand authority to sell, lease or rent out said properties to third persons. +hey reali:edrental income from the said properties for the period 1!D-1!.n 2eptem#er >!, 1D!respondent ollector of nternal evenue demanded the payment of income ta$ oncorporations, real estate dealerCs fi$ed ta$ and corporation residence ta$ for the years1!D-1!. +he letter of demand and corresponding assessments were delivered topetitioners on ecem#er @, 1D!, whereupon they instituted the present case in theourt of +a$ Appeals, with a prayer that the decision of the respondent contained in hisletter of demand dated 2eptem#er >!, 1D! #e reversed, and that they #e a#solvedfrom the payment of the ta$es in Fuestion. +A denied their petition and su#seFuent; and =ew +rials were denied. 7ence this petition.

Isse, 6M= petitioners have formed a partnership and conseFuently, are su#*ect to theta$ on corporations provided for in the =, as well as to the residence ta$ forcorporations and the real estate dealers fi$ed ta$.

Held, YES5

+he essential elements of a partnership are two, namely5

(a) an agree;ent to "ontri&te ;one!(propert! or indstr! to a "o;;on


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transactions9 (@) +he aforesaid lotswere not devoted to residential purposes, or to otherpersonal uses, of petitioners herein.Although, ta&en singly, they might not suffice toesta#lish the intent necessary to constitute a partnership, thecollective effect of thesecircumstances is such as to leave no room for dou#t on the e$istence of said intentinpetitioners herein./or purposes of the ta$ on corporations, our =ational nternal

evenue ode, includes these partnershipsO

with the e$ception only of duly registered general copartnerships

O

within the purview of the termcorporation. t is, therefore, clear to our mind thatpetitioners herein constitute a partnership, insofar as saidode is concerned and aresu#*ect to the income ta$ for corporations.

Y-0% 45 YANG CHIA% SENG # Mi6eang hiao 2eng proposed to form a partnership with osario ulo to run and operate a

theatre on the premises occupied #y ine ro, 'la:a 2ta. ru:, ;anila, wM the ffprincipal conditions5 (1) ang guarantees ulo a monthly participation of '@,??? (>)partnership shall #e for a period of > years and " months with the condition that if theland is e$propriated, rendered impractica#le for #usiness, owner constructs apermanent #uilding, then ulos right to lease and partnership even if period agreedupon has not yet e$pired9 (@) ulo is authori:ed to personally conduct #usiness in thelo##y of the #uilding9 and (!) after ec @1, 1!0, all improvements placed #ypartnership shall #elong to ulo #ut if partnership is terminated #efore lapse of 1 and Pyears, ang shall have right to remove improvements. 'arties esta#lished, Hang ando. td., to e$ist from July 1, 1!D K ec @1, 1!0.n June 1!", they e$ecuted a suplemntry agreement e$tending the partnership for @

years Q from 1M1M1!8 to 1>M@1M1D1+he land on which the theater was constructed was leased #y ulo from owners, 4miliaarrion and ;aria arrion 2anta ;arina for an indefinite period #ut that after 1 year,such lease may #e cancelled #y either party upon ?-day notice. n Apr 1!, theowners notified ulo of their desire to cancel the lease contract come July. ulo andhus#and #rought a civil action to declare the lease for a indefinite period. wners#rought their own civil action for e*ectment upon ulo and ang.C/I5 +wo cases were heard *ointly9 omplaint of ulo and ang dismissed declaringcontract of lease terminated. CA5 Affirmedn 1D?, ulo demanded from ang her share in the profits of the #usiness. anganswered saying he had to suspend payment #ecause of pending e*ectment suit.

ulo filed action in 1D!, alleging the e$istence of a partnership #etween them and thatang has refused to pay her shares.+e


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amount. +he agreement is a lease #ecause plaintiff didnt share either in the profits or inthe losses of the #usiness as reFuired #y Art 10" () and #ecause plaintiff wasgranted a Hguaranteed participation in the profits #elies the supposed e$istence of apartnership.ssue5 6as the agreement a contract a lease or a partnershipE

745 ismissal. +he agreement was a su#lease not a partnership. +he following arethe re>isites o< partnership,?7@two or more persons who &ind the;selves to"ontri&te ;one!, propert! or indstr!to a "o;;on


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HE0+, =.

6hat the ules of ourt reFuire is that an action #e #rought in the name of,#ut notnecessarily by, the real party in interest. (2ection >, ule >.) n fact the practice is for anattorney-at-law to #ring the action, that is to file the complaint, in the name of the

plaintiff. +hat practice appears to have #een followed in this case, since the complaint issigned #y the law firm of Araneta and Araneta, counsel for plaintiff and commenceswith the statement comes now plaintiff, through its undersigned counsel. It is tre thatthe "o;plaint also states that the plainti.) +here is nothing in the record to indicatethat the venture in which plaintiff is represented #y


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is reFuired in certain enumerated corporate acts. A2 is contractually entitled todesignate a mem#er of the 4$ecutive ommittee and the vote of this mem#er isreFuired for certain transactions- +he Agreement also reFuires a 0D% super-ma*ority vote for the amendment of thearticles and #y-laws of 2aniwares. A2 is also given the right to designate the president

and plant manager .+he Agreement further provides that the sales policy of 2aniwaresshall #e that which is normally followed #y A2 and that 2aniwares should not e$port2tandard products otherwise than through A2Cs 4$port ;ar&eting 2ervices. 3nder theAgreement, A2 agreed to provide technology and &now-how to 2aniwares R the latterpaid royalties for the same.- JB generally understood to mean an organiation formed for some temporary

purpose. !t is in fact hard"y distinguishab"e from the partnership, since their e"ementsare simi"ar community of interest in the business, sharing of profits and "osses, and amutua" right of contro".- +he main distinction cited #y most opinions in common law *urisdictions is that thepartnership "onte;plates a general &siness ith so;e degree o< "ontinit! ,

while the Foint ventre is


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+he evidence preponderates in favor of the view that the initial intention of the partieswas not to form a co-ownership #ut to esta#lish a partnership O nocencia eluao ascapitalist partner and asteel as industrial partner O the ultimate underta&ing of which

was to divide into two eFual parts such portion of the fishpond as might have #eendeveloped #y the amount e$tended #y the plaintiffs-appellees, with the further provision

that asteel should reim#urse the e$penses incurred #y the appellees over one-half ofthe fishpond that would pertain to him.2ince the partnership had for its o#*ect the division into two eFual parts of the fishpond#etween the appellees and the appellant after it shall have #een awarded to the latter,and therefore it envisaged the unauthoried transfer of one-half to parties other than theapplicant asteel, it was dissolved #y the approval of his application and the award tohim of the fishpond. +he approval was an event which made it unlawful for the #usinessof the partnership to #e carried on or for the mem#ers to carry it on in partnership thusdissolving the same. As reiterated in Art. 18@?(@) of the ivil ode, one of the causesfor the dissolution of a partnership, ... any event which ma&es it unlawful for the

#usiness of the partnership to #e carried on or for the mem#ers to carry it on inpartnership. +he approval of the appellantCs fishpond application #rought to the foreseveral provisions of law which made the continuation of the partnership unlawful andtherefore caused its ipso facto dissolution.+he case was remanded to the lower court for the reception of evidence relative to anaccounting todetermine profits and shares reali:ed #y #oth parties.

Ar&es v Polisti"o ris

/acts5Ar#es et al (plaintiffs) were mem#ers or shareholders of +urnuhan 'olistico and'olistico et al (defendants) were directors, president-treasurer and secretary of theassociation. +his case has #een #rought for the second time to the 2. +he first one

was when the same plaintiffs appeared from the order of the court #elow sustaining thedefendantCs demurrer, and reFuiring the former to amend their complaint within a period,so as to include all the mem#ers of +urnuhan 'olistico R o., either as plaintiffs or asdefendants. +his court held then that in an action against the officers of a voluntaryassociation to wind up its affairs and enforce an accounting for money and property intheir possessions, it is not necessary that all mem#ers of the association #e madeparties to the action. (Gorlasa vs. 'olistico, !0 'hil., @!D.) Suintos, of the nsularAuditorCs ffice, was appointed to e$amine all the #oo&s, documents, and accounts of+urnuhan 'olistico R o., and to receive whatever evidence the parties might desire topresent. 'olistico et al o#*ected to the commissionerCs report.+he +, however, held that the association +urnuhan 'olistico R o. is unlawful, andsentenced the defendants *ointly and severally to return the amount of '>!,"?0.8?, as


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well as the documents showing the uncollected credits of the association, to Ar#es, et alin and to the rest of the mem#ers of the said association represented #y said plaintiffs.'olistico et al contend that #ecause +urnuhan 'olistico R o., is unlawful, somecharita#le institution to whom the partnership funds may #e ordered to #e turned over,should #e included, as a party defendant. +he appellants refer to article 1""" of the ivil

ode, which provides5 A partnership must have a lawful o#*ect, and must #e esta#lishedfor the common #enefit of the partners. 6hen the dissolution of an unlawful partnershipis decreed, the profits shall #e given to charita#le institutions of the domicile of thepartnership, or, in default of such, to those of the province.ssue56M= the charita#le institutions are considered as necessary parties for the totaldisposition of this caseE7eld5=o. +he partnership is an unlawful partnership. According to paragraph > of Art 1""" of

the ivil ode, when an unlawful partnership is *udicially dissolved, the earnings shallnot #e disposed of as profits, #ut shall #e give to charita#le institutions. Gut in a caseli&e the one at #ar, whose o#*ect is to determine the rights of the parties, and to liFuidatethe unlawful partnership, no charita#le institution should #e included as defendant, asthe appellants content, #ecause it is not a necessary party to the case.Art. 1""" of the ivil ode allows no action for the purpose of o#taining the earningsmade #y the unlawful partnership, during its e$istence, as a result of the #usiness in

which it was engaged9 #ecause for that purpose the partner will have to #ase his actionon the partnership contract which is null and without legal e$istence #y reason of itsunlawful o#*ect, and it is self-evident that what does not e$ist cannot #e a cause ofaction.

/ernande vs5 +e la Rosa/a"ts, n the part of plaintiff /ernande:, he claims that he entered into a ver#alagreement with defendant e la osa to form a partnership for the purchase of cascoes

with the underta&ing that the defendant will #uy the cascoes and that each partner willfurnish such amount as he could, while the profits will #e divided proportionately.'laintiff furnished '@?? for casco =o. 1D1D and '8>D for casco =o. >?8, #oth of which

were placed under the name of the defendant only. n April 1??, the parties undertoo&to draw up articles of their partnership for the purpose of em#odying it in an authenticdocument. +he agreement however did not materiali:e #ecause defendant proposedarticles which were materially different from their ver#al agreement, and he was alsounwilling to include casco =o. >?8 in the partnership. Gecause the cascoes were underthe management of the defendant, the plaintiff demanded an accounting over it to whichthe defendant refused claiming that no partnership e$isted #etween them.e la osa, on the other hand, admits that he desired to form a partnership with theplaintiff #ut denies that any agreement was ever consummated. ;oreover, he denied


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receiving any money furnished #y plaintiff for casco =o. 1D1D, #ut claims that he merely#orrowed the '@?? on his individual account from the #a&ery #usiness in which plaintiff

was a co-partner. And as for the '8>D furnished #y the plaintiff, the defendant claimsthat it was actually for casco =o. 1D1D and not for casco =o. >?8. 7e also added thatthe repairs made on the two cascoes were e$clusively #orne #y him, and that he

returned a sum of '1,1>D to plaintiff with an e$press reservation on his part of all hisrights as a partner.Isse,a) 6M= a partnership e$isted #etween the parties. es.#) 6M= the partnership was terminated when the defendant returned the '1,1>D toplaintiff. =o.Held,a) +he essential points upon which the minds of the parties must meet in acontract of partnership are 1) mutual contri#ution and >) *oint interest in the profits.+he fact that the defendant received money furnished #y the plaintiff for the purpose ofusing it to purchase the cascoes esta#lishes the first element of the partnership, mutualcontri#ution to a common stoc&. /or the second element, the fact that the formation ofpartnership had #een a su#*ect of negotiation #etween them, even #efore the purchase

of the first casco, and that #oth parties intended to purchase the cascoes in commonsatisfies the reFuirement that there should #e an intention on the part of #oth parties toshare the profits. 6ith these, a complete and perfect contract of partnership wasentered into #y the parties.t must #e noted however that this partnership was su#*ect to a suspensive condition

which is the e$ecution of a written agreement regarding the distri#ution of profits,character of partnership, etc. Gut since the defendant actually purchased the cascoes, it

would seem that the partnership already e$isted. And as furthermore provided #y theivil ode, a written agreement was not necessary in order to give efficacy to the ver#alagreement of the partnership #ecause the contri#utions of the partners to thepartnership were not in the form of immova#les.#) uring trial, the court was a#le to prove that plaintiff actually furnished some amountfor the repair of the cascoes and that it was presumed that a profit has #een o#tained #ythe defendant prior to the return of the money. 6ith these, the return of the '1,1>D fellshort of the amount which the plaintiff has actually contri#uted to the partnership. /orthese reasons, the acceptance #y the plaintiff of the amount returned #y the defendantdid not have the effect of terminating the legal e$istence of the partnership #yconverting it into a societas leonina.+he court also proved that there was no intention on the part of the plaintiff, in acceptingthe money, to relinFuish his rights as a partner. n the contrary he notified defendantthat he waived none of his rights in the partnership. Also the lac& of recognition on thepart of the defendant of the plaintiffs right in the partnership property and in the profitsdoes not give the former the right to force a dissolution upon the later upon the terms

which the plaintiff is unwilling to accept. A partnership therefore e$isted #etween the twoand cascoes =o. 1D1D and >?8 are partnership properties.

ealu#it v Jaso K ary

2eptem#er >1, >?11


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J24/=A '. 4A3G+, 'etitioner,

vs.

'24= . JA2 and 44=


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concerned, Article 181@ of the ivil ode provides as follows5

Art. 181@. A conveyance #y a partner of his whole interest in the partnership does notitself dissolve the partnership, or, as against the other partners in the a#sence ofagreement, entitle the assignee, during the continuance of the partnership, to interfere

in the management or administration of the partnership #usiness or affairs, or to reFuireany information or account of partnership transactions, or to inspect the partnership#oo&s9 #ut it merely entitles the assignee to receive in accordance with his contracts theprofits to which the assigning partners would otherwise #e entitled. 7owever, in case offraud in the management of the partnership, the assignee may avail himself of the usualremedies.

n the case of a dissolution of the partnership, the assignee is entitled to receive hisassignors interest and may reFuire an account from the date only of the last accountagreed to #y all the partners.

/rom the foregoing provision, it is evident that (t)he transfer #y a partner of hispartnership interest does not ma&e the assignee of such interest a partner of the firm,nor entitle the assignee to interfere in the management of the partnership #usiness or toreceive anything e$cept the assignees profits. +he assignment does not purport totransfer an interest in the partnership, #ut only a future contingent right to a portion ofthe ultimate residue as the assignor may #ecome entitled to receive #y virtue of hisproportionate interest in the capital. 2ince a partners interest in the partnershipincludes his share in the profits, we find that the A committed no reversi#le error inruling that the 2pouses Jaso are entitled to Giondos share in the profits, despiteJuanitas lac& of consent to the assignment of said /renchmans interest in the *oint

venture. Although 4den did not, moreover, #ecome a partner as a conseFuence of theassignment andMor acFuire the right to reFuire an accounting of the partnership#usiness, the A correctly granted her prayer for dissolution of the *oint ventureconforma#ly with the right granted to the purchaser of a partners interest under Article18@1 of the ivil ode.

'rimelin& 'roperties v a:atin-;agat K Galdr

espondent then filed a collection suit against hua, ao and 'ded.


19/91

$arantilla $r v $arantilla ris

/A+25

+he present case stems from the complaint filed #y Antonieta Jarantilla againstGuenaventura emotigue, ynthia emotigue, /ederico Jarantilla, Jr., oroteoJarantilla and +omas

/A+25 n 1!, 'rimelin& 'roperties and the a:atin si#lings entered into a *ointventure agreement where#y the a:atins shall contri#ute a huge parcel of land and'rimelin& shall develop the same into a su#division. /or ! years however, 'rimelin&failed to develop the said land. 2o in 18, the a:atins filed a complaint to rescind the

*oint venture agreement with prayer for preliminary in*unction. n said case, 'rimelin&was declared in default or failing to

II5 NAT-RE and CHARACTERISTICS

T%CA% and BE0% v CA and ANAY # Mi6e

6illiam Gelo introduced =enita Anay to his girlfriend, ;ar*orie +ocao. +he three agreedto form a JB for the sale of coo&ing wares. Gelo was to contri#ute '>.D million9 +ocaoalso contri#uted some cash and she shall also act as president and


20/91

Anay was not even an employee #ecause when they ventured into the agreement, theye$plicitly agreed to profit sharing this is even though Anay was receiving commissions#ecause this is only incidental to her efforts as a head mar&eter.

+he 2upreme ourt also noted that a partner who is e$cluded wrongfully from a

partnership is an innocent partner. 7ence, the guilty partner must give him his due uponthe dissolution of the partnership as well as damages or share in the profits Hreali:edfrom the appropriation of the partnership #usiness and goodwill. An innocent partnerthus possesses Hpecuniary interest in every e$isting contract that was incomplete and inthe trade name of the co-partnership and assets at the time he was wrongfullye$pelled.

An un*ustified dissolution #y a partner can su#*ect him to action for damages #ecause#y the mutual agency that arises in a partnership, the doctrine of de"ectus personaeallows the partners to have thepo#er, although not necessarily the right to dissolve thepartnership.

+ocaos unilateral e$clusion of Anay from the partnership is shown #y her memo to theu#ao office plainly stating that Anay was, as of cto#er , 180, no longer the vice-president for sales of ?, >??1.

Gelo is not a partner. Anay was not a#le to prove that Gelo in fact received profits fromthe company. Gelo merely acted as a guarantor. 7is participation in the #usinessmeetings was not as a partner #ut as a guarantor. 7e in fact had only limitedpartnership. +ocao also testified that Gelo received nothing from the profits. 2 alsonoted that the partnership was yet to #e registered in the 24. As such, it wasunderstanda#le that Gelo, who was after all petitioner +ocaos good friend andconfidante, would occasionally participate in the affairs of the #usiness, though never ina formal or official capacity.

T%RRES v CA

n 1", sisters Antonia +orres and 4meteria Garing entered into a *oint ventureagreement with ;anuel +orres. 3nder the agreement, the sisters agreed to e$ecute adeed of sale in favor ;anuel over a parcel of land, the sisters received no cash paymentfrom ;anuel #ut the promise of profits ("?% for the sisters and !?% for ;anuel) K saidparcel of land is to #e developed as a su#division.

;anuel then had the title of the land transferred in his name and he thereafter


21/91

mortgaged the property. 7e used the proceeds from the mortgage to start #uildingroads, cur#s and gutters. ;anuel also contracted an engineering firm for the #uilding ofhousing units. Gut due to adverse claims in the land, prospective #uyers were scared offand the su#division pro*ect eventually failed.

+he sisters then filed a civil case against ;anuel for damages eFuivalent to "?% of thevalue of the property, which according to the sisters, is whats due them as per thecontract.

+he lower court ruled in favor of ;anuel and the ourt of Appeals affirmed the lowercourt.

+he sisters then appealed #efore the 2upreme ourt where they argued that there is nopartnership #etween them and ;anuel #ecause the *oint venture agreement is void.

ISS-E, 6hether or not there e$ists a partnership.

HE0+, es. +he *oint venture agreement the sisters entered into with ;anuel is apartnership agreement where#y they agreed to contri#ute property (their land) whichwas to #e developed as a su#division. 6hile on the other hand, though ;anuel did notcontri#ute capital, he is an industrial partner for his contri#ution for general e$pensesand other costs. /urthermore, the income from the said pro*ect would #e dividedaccording to the stipulated percentage ("?-!?). learly, the contract manifested theintention of the parties to form a partnership. /urther still, the sisters cannot invo&e theirright to the "?% value of the property and at the same time deny the same contract

which entitles them to it.

At any rate, the failure of the partnership cannot #e #lamed on the sisters, nor can it #e#lamed to ;anuel (the sisters on their appeal did not show evidence as to ;anuelsfault in the failure of the partnership). +he sisters must then #ear their loss (which is"?%). ;anuel does not #ear the loss of the other !?% #ecause as an industrial partnerhe is e$empt from losses.

0i; Tong 0i; v Phil /ishing Gear Ind5 In" Bian"a

G5R5 No5 7J'' Nove;&er ( 7888

0IM T%NG 0IM( petitioner( vs5 PHI0IPPINE /ISHING GEAR IN+-STRIES( INC5(respondent5

A partnership may #e deemed to e$ist among parties who agree to #orrow money topursue a #usiness and to divide the profits or losses that may arise therefrom, even if itis shown that they have not contri#uted any capital of their own to a common fund.+heir contri#ution may #e in the form of credit or industry, not necessarily cash or fi$edassets. Geing partner, they are all lia#le for de#ts incurred #y or on #ehalf of thepartnership. +he lia#ility for a contract entered into on #ehalf of an unincorporated


22/91

association or ostensi#le corporation may lie in a person who may not have directlytransacted on its #ehalf, #ut reaped #enefits from that contract.

/a"ts,

n #ehalf of cean Suest /ishing orporation, Antonio hua and 'eter ao enteredinto a ontract for the purchase of fishing nets of various si:es from the 'hilippine/ishing


23/91

of third parties and su#*ect to the outcome of the settlement of the accounts #etweenthe parties, a#sent any agreement of the parties in their JBA to the contrary (here noagreement in the JBA as to winding up). 3ntil the partnership accounts are determined,it cannot #e ascertained how much any of the parties is entitled to, if at all.

7eirs of +an 4ng Vee v A and Genguet um#er oK 'at/acts5

+he complaint alleged that after the second 6orld 6ar, +an 4ng Vee and +an 4ng ay,pooling their resources and industry together, entered into a partnership engaged in the#usiness of selling lum#er and hardware and construction supplies. +hey named theirenterprise Genguet um#er which they *ointly managed until +an 4ng VeeCs death.'etitioners claimed that +an 4ng ay and his children caused the conversion of thepartnership Genguet um#er into a corporation called Genguet um#er ompany.'etitioners prayed for accounting of the partnership assets, and the dissolution, windingup and liFuidation thereof, and the eFual division of the net assets of Genguet um#er.+he + ruled in favor of petitioners, declaring that Genguet um#er is a *oint venture

which is a&in to a particular partnership. +he ourt of Appeals rendered the assaileddecision reversing the *udgment of the trial court.

ssue5 6hether or not +an 4ng Vee and +an 4ng ay were partners in Genguet um#er.

7eld5 =.

+he trial court determined that +an 4ng Vee and +an 4ng ay had entered into a *ointventure, which it said is a&in to a particular partnership. A particular partnership is

distinguished from a *oint adventure, to wit5

(a) A *oint adventure (an American concept similar to our *oint accounts) is a sort ofinformal partnership, with no firm name and no legal personality. n a *oint account, theparticipating merchants can transact #usiness under their own name, and can #eindividually lia#le therefor.

(#) 3sually, #ut not necessarily a *oint adventure is limited to a 2=


24/91

esta#lish a partnership.

3nfortunately for petitioners, +an 4ng Vee has passed away. nly he, aside from +an4ng ay, could have e$pounded on the precise nature of the #usiness relationship#etween them.

n the a#sence of evidence, we cannot accept as an esta#lished fact that +an 4ng Veeallegedly contri#uted his resources to a common fund for the purpose of esta#lishing apartnership. Gesides, it is indeed odd, if not unnatural, that despite the forty years thepartnership was allegedly in e$istence, +an 4ng Vee never as&ed for an accounting.

+he essence of a partnership is that the partners share in the profits and losses. 4achhas the right to demand an accounting as long as the partnership e$ists.

A demand for periodic accounting is evidence of a partnership. uring his lifetime, +an4ng Vee appeared never to have made any such demand for accounting from his#rother, +ang 4ng ay. 6e conclude that +an 4ng Vee was only an employee, not apartner. 4ven if the payrolls as evidence were discarded, petitioners would still #e #ac&to sFuare one, so to spea&, since they did not present and offer evidence that wouldshow that +an 4ng Vee received amounts of money allegedly representing his share inthe profits of the enterprise.

+here #eing no partnership, it follows that there is no dissolution, winding up orliFuidation to spea& of.

7ence,the petition must fail.

2evilla v A K Jen

+%CTRINE, A Foint ventre( in"lding a partnership( prespposes generall! ao< standing &eteen the Foint "o#.ventrers or partners( in hi"h ea"h part! hasan e>al proprietar! interest in the "apital or propert! "ontri&ted and hereea"h part! exer"ises e>al rights in the "ond"t o< the &siness.

NAT-RE, Appeal #y certiorari P%NENTE,2armiento, J. /ACTS,

75 n the strength of a contract entered into #y and #etween ;rs. 2egundina=oguera and the +ourist 6orld 2ervice, nc., represented #y ;r. 4liseo anilao,the +ourist 6orld 2ervice, nc. leased the premises #elonging to =oguera at;a#ini 2t., ;anila for the formers use as a #ranch office. 6hen the #ranch office

was opened, the same was run #y the herein appellant ina 2evilla.

>. +he +ourist 6orld 2ervice, nc. appears to have #een informed that ina


25/91

2evilla was connected with a rival firm, the 'hilippine +ravel Gureau, and, since the#ranch office was anyhow losing, the +ourist 6orld 2ervice considered closingdown its office. +his was firmed up #y two resolutions of the #oard of directors of +ourist6orld 2ervice, nc. the first a#olishing the office of the manager and vice-Lpresidentof the +ourist 6orld 2ervice, nc., 4rmita Granch, and the second, authori:ing the

corporate secretary to receive the properties of the +ourist 6orld 2ervice then locatedat the said #ranch office. +o comply with the mandate of the +ourist 6orld 2ervice, thecorporate secretary


26/91

@. The petitioners "ontend( hoever( that relation &eteen the &eteenparties as one o< Foint ventre, #ut concede that $#hatever might have been thetrue re"ationship bet#een %evi""a and Tourist &or"d %ervice,$the ule of awen*oined +ourist 6orld 2ervice and anilao from ta&ing the law into their own hands, inreference to the padloc&ing now Fuestioned.

!. +he ourt finds the resolution of the issue material, for if, as the privaterespondent, +ourist 6orld 2ervice, nc., maintains, that the relation #etweenthe parties was in the character of employer and employee, the courts would have#een without *urisdiction to try the case, la#or disputes #eing the e$clusive domainof the ourt of ndustrial elations, later, the Gureau f a#or elations, pursuant tostatutes then in force.

D. The re"ords ill sho that the petitioner( 0ina Sevilla( as not s&Fe"t to"ontrol &! the private respondent Torist 3orld Servi"e( In"5(either as to theresult of the enterprise or as to the means used in connection therewith.

a. n the first place, under the contract of lease covering the +ourist 6orlds 4rmitaoffice, she had #ound herself in so"idum as and for rental payments, an arrangementthat would #e li&e claims of a master-Lservant relationship. +rue the respondentourt would later minimi:e her participation in the lease as one of mereguaranty, that does not ma&e her an employee of +ourist 6orld, since in any case, atrue employee cannot #e made to part with his own money in pursuance of hisemployerCs #usiness, or otherwise, assume any lia#ility thereof. n that event, theparties must #e #ound #y some other relation, #ut certainly not employment.

#. n the second place, and as found #y the Appellate ourt, CTwUhen the#ranch office was opened, the same was run #y the herein

appellant ina . 2evilla paya#le to +ourist 6orld 2ervice, nc. #y any airline for anyfare #rought in on the effort of ;rs. ina 2evilla. 3nder these circumstances, it

cannot #e said that 2evilla was under the control of +ourist 6orld 2ervice, nc. asto the means used. 2evilla in pursuing the #usiness, o#viously relied on her owngifts and capa#ilities.

". t is further admitted that Sevilla as not in the "o;pan!Ks pa!roll5 /or here


27/91

accepting +ourist 6orld 2ervice, nc.Cs control over the manner in which the#usiness was run. A Foint ventre( in"lding a partnership( prespposesgenerall! a o< standing &eteen the Foint "o#. ventrers or partners( in hi"hea"h part! has an e>al proprietar! interest in the "apital or propert!"ontri&ted and here ea"h part! exer"ises e>al rights in the "ond"t o< the

&siness.. /urthermore, the parties did not hold the;selves ot as partners( and the&ilding itsel< as e;&ellished ith the ele"tri" sign Torist 3orldServi"e( In"5 in lie o< a distin"t partnership na;e5

7*5 t is the ourtCs considered opinion, hen the petitioner( 0ina Sevilla(agreed to ?o@;an the private respondent( Torist 3orld Servi"e( In"5KsEr;ita o


28/91

Gourns v arman K iv

ietrich v /reeman - Gianca

G5R5 No5 0#J)9) $anar! )( 7877

GE%RGE %5 +IETRICH(plaintiff-appellee, vs. %55 /REEMAN( $AMES 05 PIERCE(and B-RT%N 3HITC%MB(defendants. B-RT%N 3HITC%MB(appellant.

/a"ts,

.V. /reeman, James . 'ierce, and Gurton 6hitcom# (as owners and operators of the;anila 2team aundry) filed a complaint to recover the sum of 'D> alleged to #e the#alance due the plaintiff for services rendered in favor of defendants.

+-/reeman and 6hitcom# were ordered to pay *ointly and severally, for the sum of

'0D>, . +he complaint as to 'ierce was dismissed, 6hitcom# alone appealing.

ISS-E,6= the court erred in ordering /reeman and 6hitcom# to pay *ointly andseverally

HE0+, YES5

t appears from the record that 6hitcom# never &new the plaintiff, never had anything todo with personally, and that the plaintiffCs contract was with /reeman, the managingpartner of the laundry. t further appears from the record that 'ierce, after he sold hisinterest in this laundry to 6hitcom#, continued to loo& after 6hitcom#Cs interest #y

authority of the latter.

+he partnership entered into #y /reeman and 6hitcom# show clearly that suchpartnership was not a commercial one9 hence the provisions of the ivil ode and notthe ode of ommerce must govern in determining the lia#ility of the partners.

n 'ourns vs. Carman,the partnership was one of cuentas en participacion. Apartnership, Fuoting from the sylla#us in this case, constituted in such a manner thatits e$istence was only &nown to those who had an interest in the same, there #eing nomutual agreement #etween the partners, and without a corporate name indicating to the

pu#lic in some way that there were other people #esides the one who ostensi#lymanaged and conducted the #usiness, is e$actly the accidental partnership of cuentasen participacion defined in article >@ of the ode of ommerce.

n a partnership of cuentas en participacion, under the provisions of article >!> of theode of ommerce, those who contract with the person in whose name the #usiness ofsuch a partnership was conducted shall have only the right of action against such


29/91

person and not against other persons interested. 2o this case is easily distinguishedfrom the case at #ar, in that the one did not have the corporate name while the other

was &nown as the ;anila 2team aundry.

+he plaintiff was employed #y and performed services for the ;anila 2team aundry

and was not employed #y nor did he perform services for /reeman alone. +he pu#lic didnot deal with /reeman and 6hitcom# personally, #ut with the ;anila 2team aundry.+hese two partners were doing #usiness under this name and, as we have said, it wasnot a commercial partnership. +herefore, #y the e$press provisions of articles 1"8 and11@0 of the ivil ode the partners are not lia#le individually for the entire amount duethe plaintiff. +he lia#ility is pro rata and in this case the appellant is responsi#le to theplaintiff for only one-half of the de#t.

/or these reasons the *udgment of the court #elow is reversed and *udgment entered infavor of the plaintiff and against the defendant 6hitcom# for the sum of '@0", withinterest as fi$ed #y the court #elow

Giglangawa v onstantino - iv

%na vs5 CIR/5 n 1!! oren:o na was appointed administrator of the estate of his late wife JuliaGunales. +he administrator su#mitted the pro*ect of partition, which was approved #ythe court. 7owever, there was no attempt was made to divide the properties among hisD children. nstead, the properties remained under the management of oren:o whoused the said properties in #usiness #y leasing or selling them and investing the income

derived therefrom.n the years 1!! to 1D!, respondent did treat petitioners as co-owners, not lia#leto corporate ta$, and it was only from 1DD that considered them as having formedan unregistered partnership.5 6M= an unregistered partnership was formed.75 - es. t is admitted that all profits from these ventures were divided amongpetitioners proportionately in accordance with their respective shares in the inheritance.N /rom the moment petitioners allowed not only the incomes from their respectiveshares #ut even the properties themselves to #e used #y oren:o as a common fund in

underta&ing several transactions or #usiness, with the intention of deriving profit to #eshared #y them proportionately, such act was tantamount to actually contri#uting suchincomes to a common fund and, in effect they there#y formed an unregisteredpartnership ta$a#le #y law.Re!es vs5 CIR


30/91

/5 'etitioners purchased a lot and #uilding. +he initial payment was shared eFually #ythe respondents. At the time of the purchase, the #uilding was leased to varioustenants, whose rights under the lease contracts with the original owners, thepurchasers, petitioners herein, agreed to respect. +he administration of the #uilding wasentrusted to an administrator who collected the rents9 &ept #oo&s and records and

rendered statement of accounts to the owners. 'etitioners divided eFually the income ofoperation and maintenance.+he +A held that petitioners formed a partnership ta$a#le #y law applying the ruling in4vangelista case.5 6M= petitioners indeed formed a partnership as contemplated #y law.75 N es. +he essential elements of partnerships are present in this case, namely9 (a) anagreement to contri#ute money, property, or industry to a common fund9 and (#) intent todivide the profits among the contracting parties.N +he first was already admitted and therefore it #oils down to their intent in acting as

they did.N 3pon consideration of the circumstances surrounding the case, it was found out thatthe petitioners purpose was to engage in real estate transactions for monetary gain andthen divide the same among themselves.N n the case at #ar, there was a common fund used in a series of transactions9 theproperty thus acFuired was not used for residential or other purposes other thanleasing. 2uch properties having #een under management #y one person with full powerto lease and such condition e$isted for 1? years already.N +he collective effect of these circumstances is such as to leave no room for dou#t onthe e$istence of said intent in the petitioners herein.Sardane vs5 CA/5 'etitioner advanced the theory that he is a partner of private respondent and not amere employee inde#ted to the latter. 'etitioners #ases are the promissory notese$ecuted #y private respondent in favor of petitioner as allegedly his share orcontri#ution for the partnership.5 6M= there e$ists a partnership #etween petitioner and private respondent.75 =o. 6hile receipt of a share in the profits of the #usiness is a prima facie evidencethat the person is receiving the same as a partner, no inference shall #e drawn if suchprofits were received in payment of his wages as an employee.%&illos vs5 CIR ('rofit merely incidental)/5 +his case is a#out the income ta$ lia#ility of four #rothers and sisters who sold twoparcels of land which they had acFuired from their father.Co;;issioner o< Internal Revene re>ired the


31/91

income taxon the total profit of '1@!,@@" in addition to individual income ta$ on theirshares thereof 7e assessed '@0,?18 as corporate income ta$, '18,D? as D?% fraudsurcharge and '1D,D!0.D" as !>% accumulated interest, or a total of P,+.-.+he ommissioner acted on the theory that the four petitioners had formed anunregistered partnership or *oint venture within the meaning of sections >!(a) and 8!(#)

of the +a$ odeU5 6M= an unregistered partnership was formed.75 N =o. +heir original purpose was to divide the lots for residential purposes. f later onthey found it not feasi#le to #uild their residences on the lots #ecause of the high cost ofconstruction, then they had no choice #ut to resell the same to dissolve the co-ownership.N +he division of the profit was merely incidental to the dissolution of the co-ownership which was in the nature of things a temporary state. t had to #e terminatedsooner or later.

N Article 10"(@) of the ivil ode provides that the sharing of gross returns does notof itself esta#lish a partnership, whether or not the persons sharing them have a *oint orcommon right or interest in any property from which the returns are derived. There;st &e ann;ista6a&le intention to , however, the relationship #etween the #rothers turned sour. And so Aureliodemanded an accounting and the liFuidation of his share in the partnership. 4duardodid not heed which led to AurelioCs filing a suit against his #rother 4duardo for specificperformance and accounting.ISS-E, 6hether or not there e$ists a partnership #etween the parties.HE0+, N%. +he partnership is void and legally none$istent. +he documentary evidencepresented #yAurelio, i.e. the letter from 4duardo and the ;emorandum, did not prove partnership.


32/91

+he 10@ letter from 4duardo on its face, contains typewritten entries, personal in tone,#ut is unsigned and undated. As an unsigned document, there can #e no Fui##ling thatsaid letter does not meet the pu#lic instrumentation reFuirements e$acted under Article1001 (how partnership is constituted) of the ivil ode. ;oreover, being unsigned and

doubt"ess referring to a partnership invo"ving more thanP,. in money or property, said "etter cannot be presented for notariation, "eta"one registered #ith the %ecurities and /0change Commission (%/C), as called forunder the Article 100> (capitali:ation of apartnership) of the ode. And inasmuch as theinventory reFuirement under the succeeding Article 100@goes into the matter of validity

when immova#le property is contri#uted to the partnership, the ne$t logical point ofinFuiry turns on the nature of Aurelios contri#ution, if any, to the supposed partnership.+he ;emorandum is also not a proof of the partnership for the same is not a pu#licinstrument and again, no inventory was made of the immova#le property and noinventory was attached to the ;emorandum.

Article 100@ of the ivil ode reFuires that if immova#le property is contri#uted to thepartnership an inventory shall #e had and attached to the contract.A complaint for delivery and accounting of partnership property #ased on such void orlegally non-e$istent actiona#le document is dismissi#le for failure to state of action.6744/4, the instant petition was 4=4

Agila $r v CA ris

/acts5n April 11, the spouses u#en and /elicidad A#rogar entered into a loan agreement

with a lending firm called A.. Aguila R 2ons, o., a partnership. +he loan was for'>??&. +o secure the loan, the spouses mortgaged their house and lot located in asu#division. +he terms of the loan further stipulates that in case of non-payment, theproperty shall #e automatically appropriated to the partnership and a deed of sale #ereadily e$ecuted in favor of the partnership. 2he does have a ?-day redemption period.

u#en died, and /elicidad failed to ma&e payment. 2he refused to turn over theproperty and so the firm filed an e*ectment case against her (wherein she lost). 2he alsofailed to redeem the property within the period stipulated. 2he then filed a civil caseagainst Alfredo Aguila, manager of the firm, see&ing for the declaration of nullity of thedeed of sale. +he + retained the validity of the deed of sale. +he ourt of Appealsreversed the +. +he A ruled that the sale is void for it is a pactum commissoriumsale which is prohi#ited under Art. >?88 of the ivil ode (note the disparity of thepurchase price, which is the loan amount, with the actual value of the property which isafter all located in a su#division).ssue56hether or not the case filed #y /elicidad shall prosper.


33/91

7eld5=o. 3nfortunately, the civil case was filed not against the real party in interest. Aspointed out #y Aguila, he is not the real party in interest #ut rather it was the partnershipA.. Aguila R 2ons, o. +he ules of ourt provide that Hevery action must #e

prosecuted and defended in the name of the real party in interest. A real party ininterest is one who would #e #enefited or in*ured #y the *udgment, or who is entitled tothe avails of the suit. Any decision rendered against a person who is not a real party ininterest in the case cannot #e e$ecuted. 7ence, a complaint filed against such a personshould #e dismissed for failure to state a cause of action, as in the case at #ar.

3nder Art. 10"8 of the ivil ode, a partnership Hhas a *uridical personality separate anddistinct from that of each of the partners. +he partners cannot #e held lia#le for theo#ligations of the partnership unless it is shown that the legal fiction of a different

*uridical personality is #eing used for fraudulent, unfair, or illegal purposes. n this case,/elicidad has not shown that A.. Aguila R 2ons, o., as a separate *uridical entity, is

#eing used for fraudulent, unfair, or illegal purposes. ;oreover, the title to the su#*ectproperty is in the name of A.. Aguila R 2ons, o. t is the partnership, not its officers oragents, which should #e impleaded in any litigation involving property registered in itsname. A violation of this rule will result in the dismissal of the complaint.

2unga v hua K ary (include the discussion on if capital at least '@???)

??1G4+7 23=


34/91

petitioner ili#eth, too& over the operations, control, custody, disposition andmanagement of 2hellite without respondentCs consent. espite respondentCs repeateddemands upon petitioners for accounting, inventory, appraisal, winding up andrestitution of his net shares in the partnership, petitioners failed to comply.

'etitioners Fuestion the correctness of the finding of the trial court and the ourt ofAppeals that a partnership e$isted #etween respondent and Jacinto from 100 untilJacintoCs death. n the a#sence of any written document to show such partnership#etween respondent and Jacinto, petitioners argues that these courts were proscri#esfrom hearing the testimonies of respondent and his witness, Josephine, to prove thealleged partnership three years after JacintoCs death. +o support this argument,petitioners invo&e the ead ;anCs 2tatuteC or 2urvivorship ule under 2ection >@,ule 1@? of the ules of ourt.

'etitioners thus implore this ourt to rule that the testimonies of respondent and hisalter ego, Josephine, should not have #een admitted to prove certain claims against a

deceased person (Jacinto), now represented #y petitioners.ssue5 6hether a partnership was formed.

7eld5 3e are not persaded5 A partnership may #e constituted in any form, e$ceptwhere immova#le property of real rights are contri#uted thereto, in which case a pu#licinstrument shall necessary. 7ence, #ased on the intention of the parties, as gatheredfrom the facts and ascertained from their language and conduct, a ver#al contract ofpartnership may arise. +he essential profits that must #e proven to that a partnership

was agreed upon are (1) mutual contri#ution to a common stoc&, and (>) a *oint interestin the profits. 3nderstanda#ly so, in view of the a#sence of the written contract ofpartnership #etween respondent and Jacinto, respondent resorted to the introduction ofdocumentary and testimonial evidence to prove said partnership. +he crucial issue tosettle then is to whether or not the ead ;anCs 2tatute applies to this case so as torender inadmissi#le respondentCs testimony and that of his witness, Josephine.

+wo reasons forestall the application of the ead ;anCs 2tatute to this case

/irst, petitioners filed a compulsory counterclaim against respondents in their answer#efore the trial court, and with the filing of their counterclaim, petitioners themselveseffectively removed this case from the am#it of the ead ;anCs 2tatute. 6ellentrenched is the rule that when it is the e$ecutor or administrator or representatives ofthe estates that sets up the counterclaim, the plaintiff, herein respondent, may testify tooccurrences #efore the death of the deceased to defeat the counterclaim. ;oreover, asdefendant in the counterclaim, respondent is not disFualified from testifying as tomatters of facts occurring #efore the death of the deceased, said action not having #een#rought against #ut #y the estate or representatives of the deceased.

2econd, the testimony of Josephine is not covered #y the ead ;anCs 2tatute for the


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simple reason that she is not a party or assignor of a party to a case or persons inwhose #ehalf a case is prosecuted. ecords show that respondent offered thetestimony of Josephine to esta#lish the e$istence of the partnership #etweenrespondent and Jacinto. 'etitionersC insistence that Josephine is the alter ego ofrespondent does not ma&e her an assignor #ecause the term assignor of a party

means assignor of a cause of action which has arisen, and not the assignor of a rightassigned #efore any cause of action has arisen. 'lainly then, Josephine is merely awitness of respondent, the latter #eing the party plaintiff.

'etitionersC reliance alone on the ead ;anCs 2tatute to defeat respondentCs claimcannot prevail over the factual findings of the trial court and the ourt of Appeals that apartnership was esta#lished #etween respondent and Jacinto. Gased not only on thetestimonial evidence, #ut the documentary evidence as well, the trial court and theourt of Appeals considered the evidence for respondent as sufficient to prove theformation of partnership, al#eit an informal one.

n a desperate #id to cast dou#t on the validity of the oral partnership #etweenrespondent and Jacinto, petitioners maintain that said partnership that had initial capitalof '>??,???.?? should have #een registered with the 2ecurities and 4$changeommission (24) since registration is mandated #y the ivil ode, +rue, Article 100>of the ivil ode reFuires that partnerships with a capital of '@,???.?? or more mustregister with the 24, however, this registration reFuirement is not mandatory. Article10"8 of the ivil ode e$plicitly provides that the partnership retains its *uridicalpersonality even if it fails to register. +he failure to register the contract of partnershipdoes not invalidate the same as among the partners, so long as the contract has theessential reFuisites, #ecause the main purpose of registration is to give notice to thirdparties, and it can #e assumed that the mem#ers themselves &new of the contents oftheir contract. n the case at #ar, non-compliance with this directory provision of the law

will not invalidate the partnership considering that the totality of the evidence proves thatrespondent and Jacinto indeed forged the partnership in Fuestion.

Ca;pos Reda 1 Co v Pa"i


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insolvency.

7eld5es. A limited partnerships *uridical personality is different from the personality of itsmem#ers. n general principle, the limited partnership must answer for and suffer the

conseFuence of its acts. 3nder our nsolvency aw, one of the acts of #an&ruptcy uponwMc an ad*udication of involuntary insolvency can #e predicated is the failure to payo#ligations.+he failure of ampos, ueda R o., to pay its o#ligations constitutes an act wMc isspecifically provided for in the nsolvency aw for declaration of involuntary insolvency.+he petitioners have a right to a *udicial decree declaring the involuntary insolvency ofsaid partnership.

A2242 A= V=2 / 'A+=427'

CIR v SterK 'at/A+25 A limited partnership named 6illiam J. 2uter C;orcoinC o., td was formed@?2eptem#er 1!0 #y 6illiam J. 2uter as the general partner, and Julia 2pirig and,"08.?" for 1D!and '!,D"0.?? for 1DD.223456hether or not the limited partnership has #een dissolved after the marriage of2uter and 2pirig and #uying the interest of limited partner arlson.3=4chaverri 1") t follows that the marriage of partnersnecessarily #rings a#out the dissolution of a pre-e$isting partnership. H6hat the lawprohi#its was when the spouses entered into a general partnership. n the case at #ar,the partnership was limited.


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- +an v el osario K Jen+%CTRINE, ?see notes &elo@NAT-RE5 onsolidated case. +wo special civil actions for prohi#itionP%NENTE5 Bitug,J.

/ACTS,W +his is a consolidated case involving the constitutionality of A 0!" or theSi;pli8 (1) inArticle B of the 180 onstitution. +he petitioner also stressed that it violates the eFualprotection clause as it only imposed ta$es upon one whopractice his profession alone and not to those who are engaged to singleproprietorship.W In the )nd "ase(they argued that respondents have ex"eeded their rle#.;a6ing athorit! in appl!ing SNIT to general pro-L@ to carry out the A. +his is anchored on theadministrative interpretation of pu#lic respondents that would apply 2=+ topartners ingeneral professional partnerships.-LW 'etitioners cited the deli#erations in the 7 regarding the implementation of thesaid rule in which it was shown that framers did not intend for the #ill to #e applica#le to#usiness corporations or partnerships

ISS-E,

1. 6= A 0!" is unconstitutional (8). N%)5 3%N in RA :'8J( the SNIT applies to partners in general pro


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o t is neither violative of eFual protection clause due to thee$istence of su#stantial difference #etween one who practice hisprofession alone and one who is engaged to proprietorship.o /urther, the 2 said that A 0!" is *ust an amendatory provision of the code

of ta$payers where it classifies ta$payers in to four main groups5 ndividuals,orporations, 4state under Judicial 2ettlement and rrevoca#le +rust.o +he court would have appreciated the contention of the petitioner if A 0!" was anindependent law. Gut since it is attached to a law that has already classified ta$payers,there is no violation of eFual protection clause.)5 Appli"ation o< SNIT to partners in general pro


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Padi""a and 'idin, JJ., are on leave.

rtega v A K iv

V=2 / 'A+=424A+= A= 3A+=- +ocao v A K *en- 2unga v hua K ary??1

G4+7 23=@,ule 1@? of the ules of ourt.


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'etitionersC reliance alone on the ead ;anCs 2tatute to defeat respondentCs claimcannot prevail over the factual findings of the trial court and the ourt of Appeals that apartnership was esta#lished #etween respondent and Jacinto. Gased not only on thetestimonial evidence, #ut the documentary evidence as well, the trial court and the

ourt of Appeals considered the evidence for respondent as sufficient to prove theformation of partnership, al#eit an informal one.

n a desperate #id to cast dou#t on the validity of the oral partnership #etweenrespondent and Jacinto, petitioners maintain that said partnership that had initial capitalof '>??,???.?? should have #een registered with the 2ecurities and 4$changeommission (24) since registration is mandated #y the ivil ode, +rue, Article 100>of the ivil ode reFuires that partnerships with a capital of '@,???.?? or more mustregister with the 24, however, this registration reFuirement is not mandatory. Article10"8 of the ivil ode e$plicitly provides that the partnership retains its *uridicalpersonality even if it fails to register. +he failure to register the contract of partnership

does not invalidate the same as among the partners, so long as the contract has theessential reFuisites, #ecause the main purpose of registration is to give notice to thirdparties, and it can #e assumed that the mem#ers themselves &new of the contents oftheir contract. n the case at #ar, non-compliance with this directory provision of the law

will not invalidate the partnership considering that the totality of the evidence proves thatrespondent and Jacinto indeed forged the partnership in Fuestion.

- Agad v ;a#ato K Gianca

G5R5 No5 0#)'78 $ne )( 78JMA-RICI% AGA+(plaintiff-appellant, vs. SE4ERIN% MABAT% and MABAT% andAGA+ C%MPANY(defendants-appellees.

/a"ts,+he complaint alleged that the plaintiff and defendant 2everino ;a#ato are partners in afishpond #usiness (pursuant to a pu#lic instrument - Anne$ A). 'laintiff filed saidcomplaint against defendant for the alleged failure and refusal of ;a#ato to renderaccounts for the years 1D0 to 1"@.

;a#ato denied the e$istence of said partnership upon the ground that the contracttherefore had not #een perfected, despite the e$ecution of Anne$ A, #ecause Agadhad allegedly failed to give his '1,??? contri#ution to the partnership capital.

+- ismissed case for failure to state a cause of action. Annex A( is nll and void(prsant to Art5 7:: o< or Civil Code( &e"ase an inventor! o< the


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ISS-E,6= Art 100@ is applica#le in this caseE

HE0+,=

Articles 1001 and 100@ of said ode provide5Art. 1001. A partnership may #e constituted in any form, e$cept where immova#leproperty or real rights are contri#uted thereto, in which case a pu#lic instrumentshall #e necessary.

Art. 100@. A contract of partnership is void, whenever immova#le property iscontri#uted thereto, if inventory of said property is not made, signed #y theparties9 and attached to the pu#lic instrument.

+he issue #efore us hinges on whether or not immova#le property or real rights have#een contributedto the partnership under consideration. n Anne$ A the partnership

was esta#lished to operate a fishpond, not to engage in a fishpond #usiness.;oreover, none of the partners contri#uted either a fishpond or a real right to anyfishpond. +heir contri#utions were limited to the sum of '1,??? each. ndeed, 'aragraph! of Anne$ A provides5

+hat the capital of the said partnership is +wo +housand ('>,???.??)'esos 'hilippine urrency, of which ne +housand ('1,???.??) pesos has #eencontri#uted #y 2everino ;a#ato and ne +housand ('1,???.??) 'esos has #eencontri#uted #y ;auricio Agad.

$ $ $ $ $ $ $ $ $

+he operation of the fishpond mentioned in Anne$ A was the purpose of thepartnership. =either said fishpond nor a real right thereto was contri#uted to thepartnership or #ecame part of the capital thereof, even if a fishpond or a real rightthereto could #ecome part of its assets.

6744/4, we find that said Article 100@ of the ivil ode is not in point and that,the order appealed from should #e, as it is here#y set aside and the case remanded tothe lower court for further proceedingsG


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;agalana and o*as shall purchase the interest, share, and participation of'ahamotang. t was agreed that, after payment of such including the loan secured #y'ahamotang, the two shall #ecome owners of all eFuipment contri#uted #y'ahamotang. +he two continued the partnership without any written agreement orreconstitution of the articles of partnership. 2u#seFuently, o*as entered into a contarct

with ;2 4state. ;aglana reminded him of his contri#ution to the capital investmentsand his duties to the partnership. o*as said he would not #e a#le to comply. ;aglanatold o*as that the latter is only entitled to >?% of the profits, which was the sharingfrom 1D0-1D without dispute. o*as too& funds from the partnership which was morethan his share. ;aglana notified o*as that he had dissolved the partnership. o*as filedan action against ;agallana. +he / ruled that the partnership of the two after'ahamotang left was one de facto and at will. +he 2 said that it was not, consideringthat the first partnership was never dissolved. 6ith regard to the issue of unilateraldissolution, the 2 held that ;aglana had the power to doso.

ISS-E,1. 6M= the partnership carried on after the second partnership was a de factopartnership and at will. =)56M= ;agalana may unilaterally dissolve the partnership. 42HE0+,1. +here was no intention to dissolve the first partnership upon the constitution of thesecond as everything else was the same e$cept for the fact that they too& in anindustrial partner5 they pursued the same purposes, the capital contri#utions call for thesame amounts, all su#seFuent renewals of +im#er icense were secured in favor of thefirst partnership, all #usinesses were carried out under the registered articles. +o allintents and purposes therefore, the /irst Articles of 'artnership were only amended, inthe form of 2upplementary Articles of o-'artnership. n the other hand, there is nodispute that the second partnership was dissolved #y common consent. 2aid dissolutiondid not affect the first partnership which continued to e$ist. 2ignificantly, ;aglana ando*as agreed to purchase the interest, share and participation in the second partnershipof 'ahamotang and that thereafter, the two (;aglana and o*as) #ecame the owners ofeFuipment contri#uted #y 'ahamotang. ;aglana even reminded o*as of his o#ligationto contri#ute either in cash or in eFuipment, to the capital investment of the partnershipas well as his o#ligation to perform his duties as logging superintendent. +his remindercannot refer to any other #ut to the provisions of the duly registered Articles of o-'artnership.>. As there are only two parties when ;aglana notified o*as that he dissolved thepartnership, it is in effect a notice of withdrawal. 3nder Article 18@?, par. > of the ivilode, even i< there is a spe"i


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dissolution. And in whatever way he may view the situation, the conclusion is inevita#lethat o*as and ;aglana shall #e guided in the liFuidation of the partnership #y theprovisions of its duly registered Articles of o-'artnership9 that is, all profits and lossesof the partnership shall #e divided share and share ali&e #etween the partners. Gut anaccounting must first #e made and which in fact was ordered #y the trial court and

accomplished #y the commissioners appointed for the purpose.According to the ommissioners report, o*as is not entitled to any profits as he failedto give the amount he had underta&en to contri#ute thus, had #ecome a de#tor of thepartnership. ;aglana cannot #e lia#le for damages as o*as a#andoned the partnershipthru his acts and also too& funds in an amount more than his contri#ution

# San"ho v 0iarraga ris

+he plaintiff #rought an action for the rescission of the partnership contract #etweenhimself and the defendant and the reim#ursement of his investment worth D?,???php

with interest at 1> per cent per annum form cto#er 1D, 1>?, with costs, and any other*ust and eFuita#le remedy against said defendant. +he defendant denies generally andspecifically all the allegations of the complaint and as&ed for the dissolution of thepartnership, and the payment to him as its manager and administrator 'D?? monthlyfrom cto#er 1D, 1>? until the final dissolution with interest.+he / found that the defendant had not contri#uted all the capital he had #oundhimself to invest hence it demanded that the defendant liFuidate the partnership,declared it dissolved on account of the e$piration of the period for which it wasconstituted, and ordered the defendant, as managing partner, to proceed without delayto liFuidate it, su#mitting to the court the result of the liFuidation together with theaccounts and vouchers within the period of thirty days from receipt of notice of said

*udgment. +he plaintiff appealed from said decision praying for the rescission of thepartnership contract #etween him and the defendant in accordance with Art. 11>!.ssue56M= plaintiff acFuired the right to demand rescission of the partnership contractaccording to article 11>! of the ivil ode.7eld5+he 2 ruled that owing to the defendants failure to pay to the partnership the wholeamount which he #ound himself to pay, he #ecame inde#ted to the partnership for theremainder, with interest and any damages occasioned there#y, #ut the plaintiff did notthere#y acFuire the right to demand rescission of the partnership contract according toarticle 11>! of the ode. Article 11>! cannot #e applied to the case in Fuestion,#ecause it refers to the resolution of o#ligations in general, whereas articles 1"81 and1"8> specifically refer to the contract of partnership in particular. And it is a well-&nownprinciple that special provisions prevail over general provisions. 7ence, 2 dismissedthe appeal left the decision appealed from in full force.


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- 'ang im and


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previously entered into #y himself.

6hile yet a partner in the firm of o 2eng and o., 'ang im participated in the creationof this lease, and when he sold out his interest in that firm to o 2eng this operated as atransfer to o 2eng of 'ang imCs interest in the firm assets, including the lease9 and

'ang im cannot now #e permitted, in the guise of a purchaser of the estate, to destroyan interest derived from himself, and for which he has received full value.

+he #ad faith of the plaintiffs in see&ing to deprive the defendant of this lease isstri&ingly revealed in the circumstance that prior to the acFuisition of this property 'angim had #een partner with o 2eng and Genito


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+uason R 2an 'edro was only composed of the surviving partners and this partnershipassumed the #usiness of the old one.ne day, on +uason entered into a contract with a certain on /eliciano to constructon /elicianoCs house. n their contract, it was not mentioned that it was made on #ehalf

of the partnership.on 2an 'edro ma&es this protest (with respect to delivery of the house) on #ehalf ofthe firm, the manager of which is on +uason. +his action is to recover the price of thehouse.#*ection was made on the right of the partnership to sue 5 wMn a partnership canmaintain an action in its own #ehalf upon a contract entered into #y one of the partnersin his own name.n the facts on record it was made to appear that5o 'artnership owns the credit

o 'artnership was in possession of the document evidencing the credito Atty appearing for the partnership held a power of attorney from the partnership,e$ecuted #y +uason as managing partnero 4verything +uason did was done #y the 'artnershipo +he action is solidary, therefore, the result is the same wMn it was #rought #y thepartnership. 'ayment should #e made to the person in whose favor the o#ligation isconstituted, or to some other person authori:ed to receive it in his name. (Art. 11"> ofthe ivil ode.)=ote5 'laintiff is the partnership, defendants are the heirs of on /eliciano.

Isse2Held,2hould payment #e made to the partnershipE ---42Ratio5 (+his part is copy paste as do not &now how to rephrase and sometimes do notunderstand old case &asi);anresa says5 +he first of these cases, the most natural and simple, refers not only tothe person who may have #een the creditor at the time the o#ligation was created #utrather to the person who is the creditor at the time payment is due. . . . +hat theprinciple laid down #y the code has this wide meaning is demonstrated #y the fact that ithas no rules, as have other codes (for instance, the Argentine code) which e$presslyauthori:ed heirs, assignees, and su#rogated creditors to demand payment, and theright of these persons #eing unFuestiona#le they must #e regarded as included in thefirst part of Art 11">, #ecause, although the o#ligation was not created in their favor, ithas su#seFuently resulted that its constitutions is to their #enefit.6hen process was served upon the defendant to answer the complaint, it could #eseen that the plaintiff was not an heir, an assignee, or a su#rogated creditor, physically


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distinct from the person who made the contract.Gut this very same person, also #ringing with him into the case the responsi#ility of ageneral partnership, which, far from declining to entertain the e$ceptions, set-offs, andcounter claims which might #e availa#le against the original creditor, underta&es to

defend against them as the original, actual, and sole creditor.t is evident that although +uason may have operated in his own name, it certainly wasnot with his own private funds. +herefore it was that this contract was communicated tothe partnership which #ecame responsi#le therefor. (Art. 1@!, ode of ommerce.)n view of the understanding and agreement #etween +uason and the partnership, theresponsi#ility of +uason #eing included in the responsi#ility of +uason R 2an 'edro, thelia#ility of the firm is not less than the personal lia#ility of the partner, as the partnership

was a general one.

+he action #rought #y the firm is simply the action in favor of the partner assumed #ythe firm.2 says the action #rought #y the partnership will lie, and the payment which may #emade to the partnership upon the circumstances stated will #e perfectly legal.+he owner, on /eliciano, and, #y his death, his heirs, are #ound to pay all the priceagreed upon to the contractor, #ecause the house #urned after the wor& terminated,and after the defendants had #ecome in default with respect to their o#ligation toreceive it, for although it is evident that the contractor has done everything incum#entupon him for the delivery of the house, it is none the less true, as a matter of fact, thatno such delivery too& place. 'etition denied.Catalan v Gat"halianK 'at

/A+25atalan and


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same in trust for his copartner


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A went #eyond what was disposed #y the decision and issued an order which reFuired

. . . +anduay istillers, nc., 6ilson oung and James u to immediatelyreinstate complainants /ernando uran, odrigo 2antos, oFue 4stoce and

4duardo aliwan to heir respective positions.

+he order of e$ecution and the writ of e$ecution ordering petitioners and +anduayistillers to reinstate private respondents employees are, therefore, null and void.

6744/4, the petition is here#y and the decision of the =ationala#or elations ommission upholding said order are set aside as null and void.

''4+ 8;auro o:ana, plaintiff-appelleevs.2erafin epa&a&i#o, defendant-appellant/acts51) ;auro o:ana esta#lished a partnership with 2erafin epa&a&i#o, wherein ;aurocontri#uted "?% and 2erafin !?% of the @?& capital, for the purpose of maintaining,operating and distri#uting electric light and power in the ;unicipality of umagas, lo-ilo., under a franchise owned #y 'iadosa Geunaflor. 2aid franchise was revo&ed andcancelled, #ut a new franchise was issued in the name of limpia ecolongon.>) ue to the cancellation of 'iadosas franchise, ;auro sold a Guda dieselgenerator to limpia, while 2erafin sold a rossly diesel engine to /eli$ and /elina7arder.@) ;auro filed a case against 2erafin, alleging that he was the owner of the Gudagenerator, valued at 8&, and 0? wo

obligations to dissolution

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