MAGPANTAY, REEM D.

PARTNERSHIP CASE DIGEST

JD4
 1. SANTIAGO VS GARCIA
G. R. No. 228356; March 9, 2020
J. REYES, JR.

QUESTION:
Edna Garcia lured Marian Santiago to make an investment in her lending business,
promising her that she will receive a monthly interest. However, there is no evidence that
can prove that there was a written agreement between the parties showing the terms of
their agreement.

Santiago made an investment in such business in the amount of P1,569,000 and

thereafter, Garcia was able to remit an interest in the amount of P877,000. Nevertheless,
despite the due demands made by Santiago, Garcia failed to remit the other interests
obtained by the investment. Thus, Santiago demanded that Edna return the total
investment made by Santiago. Garcia was able to make a partial payment of P20,000.00.

Thereafter, it came to Santiago’s knowledge that there were others who was taken
advantage of by Garcia. Hence, she filed a complaint for sum of money with prayer for
the issuance of a writ of preliminary attachment against Spouses Garcia.

Was there a contract of partnership entered into by Santiago and Garcia?

ANSWER:

No, there was no contract of partnership in this case.

As provided by the New Civil Code, by the 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. Partnership is essentially a result of
an agreement or a contract, either express or implied, oral or in writing, between two or
more persons. There must be an unmistakable intention to form a partnership.

In this case, there was neither allegation nor proof that Santiago and Garcia agreed to
enter into a partnership for purposes of carrying out the lending business. There was
likewise no agreement made by the parties as to the sharing of profits, only that Santiago
expects the remittance of interest from the amount she invested. At any rate, the receipt
of Santiago of the share in profits, monthly interest as in this case, cannot be considered
as a conclusive evidence of partnership. The New Civil Code provides that "the sharing
of gross returns does not of itself establish a partnership, whether or not the persons
sharing them have a joint or common right or interest in any property from which the
returns are derived".

The agreement between the parties does not show an unmistakable intention to form a
partnership.
 2. ANCIETO SALUDO vs. PHILIPPINES NATIONAL BANK
G.R. No. 193138; AUGUST 20, 2018
J. JARDELEZA

Question:
A Contract of Lease was entered into by PNB and SAFA Law Office. Upon the contract’s
expiration, PNB alleged that SAFA Law Office continued to occupy the premises subject
of the contract. However, it discontinued paying the monthly rental fees for such
prompting PNB to send a demand letter asking SAFA Law Office to pay its outstanding
unpaid rents. Thereafter, SAFA Law Office vacated the premises.
Saludo, as the managing partner of SAFA Law Office, filed a complaint for recomputation
of the of the outstanding rental fees. PNB, on the other hand, filed a motion to include an
indispensable party as plaintiff praying that Saludo be ordered to amend anew his
complaint to include SAFA Law Office as principal plaintiff. PNB argued that the lessee in
the Contract of Lease is not Saludo but SAFA Law Office, and that Saludo merely signed
the Contract of Lease as the managing partner of the law firm. Thus, SAFA Law Office
must be joined as a plaintiff in the complaint because it is considered an indispensable
party under Section 7, Rule 3 of the Rules of Court
Is it proper to include SAFA Law Office as defendant to PNB’s counterclaim despite the
allegation that SAFA Law Office is not a legal entity?

Answer:
Yes, SAFA Law Office is a juridical entity, hence, it may be joined as plaintiff in the case.
Contrary to Saludo's submission, SAFA Law Office is a partnership and not a single
proprietorship.
Article 1767 of the Civil Code provides that by a contract of partnership, two or more
persons bind themselves to contribute money, property, or industry to a common fund,
with the intention of dividing the profits among themselves. Two or more persons may
also form a partnership for the exercise of a profession. Under Article 1771, a partnership
may be constituted in any form, except where immovable property or real rights are
contributed thereto, in which case a public instrument shall be necessary. Article 1784,
on the other hand, provides that a partnership begins from the moment of the execution
of the contract, unless it is otherwise stipulated.

Here, absent evidence of an earlier agreement, SAFA Law Office was constituted as a
partnership at the time its partners signed the Articles of Partnership wherein they bound
themselves to establish a partnership for the practice of law, contribute capital and
industry for the purpose, and receive compensation and benefits in the course of its
operation.
Having settled that SAFA Law Office is a partnership, we hold that it acquired juridical
personality by operation of law. The perfection and validity of a contract of partnership
brings about the creation of a juridical person separate and distinct from the individuals
comprising the partnership.
 3. HEIRS OF JOSE LIM vs. JULIET VILLA LIM
G. R. No. 172690; MARCH 3, 2020
J. NACHURA

QUESTION:
In 1980, Jose Lim together with his friends engaged in a trucking business. When Jose
died, his eldest son, Elfledo Lim, became the manager of the business. However, the
herein petitioners who are also heirs of Jose Lim alleged that Elfledo never became a
partner no investor of the trucking business. He merely supervised the purchase of
additional trucks using the income of the business.

After sometime, Elfledo died and thereafter, Juliet Villa Lim, his widow, was his only heir
and thus, she was tasked to administer the properties of Elfledo. She alleged that the
properties involved in this case were acquired through their hardwork and without any
participation or contribution from the petitioners.

Did Elfledo Lim became a partner when Jose Lim, his father, died?

Answer:

Yes, he became a partner.

Article 1769 of the New Civil Code provides for the elements of partnership.

Art. 1769. In determining whether a partnership exists, these rules shall apply:

(1) Except as provided by Article 1825, persons who are not partners as to each
other are not partners as to third persons;

(2) Co-ownership or co-possession does not of itself establish a partnership,

whether such co-owners or co-possessors do or do not share any profits made by
the use of the property;

(3) The sharing of gross returns does not of itself establish a partnership, whether
or not the persons sharing them have a joint or common right or interest in any
property from which the returns are derived;

(4) The receipt by a person of a share of the profits of a business is a prima facie
evidence that he is a partner in the business, but no such inference shall be drawn
if such profits were received in payment:

(a) As a debt by installments or otherwise;

(b) As wages of an employee or rent to a landlord;

 (c) As an annuity to a widow or representative of a deceased partner;

(d) As interest on a loan, though the amount of payment vary with the profits
of the business;

(e) As the consideration for the sale of a goodwill of a business or other

property by installments or otherwise.

Applying the legal provision to the facts of this case, the following circumstances tend to
prove that Elfledo was himself the partner of Jimmy and Norberto: 1) Cresencia testified
that Jose gave Elfledo ₱50,000.00, as share in the partnership, on a date that coincided
with the payment of the initial capital in the partnership; (2) Elfledo ran the affairs of the
partnership, wielding absolute control, power and authority, without any intervention or
opposition whatsoever from any of petitioners herein; (3) all of the properties, particularly
the nine trucks of the partnership, were registered in the name of Elfledo; (4) Jimmy
testified that Elfledo did not receive wages or salaries from the partnership, indicating that
what he actually received were shares of the profits of the business; and (5) none of the
petitioners, as heirs of Jose, the alleged partner, demanded periodic accounting from
Elfledo during his lifetime. As repeatedly stressed in Heirs of Tan Eng Kee, a demand for
periodic accounting is evidence of a partnership.
 4. FERNANDO SANTOS, petitioner, vs. Spouses ARSENIO
and NIEVES REYES, respondents.
G.R. No. 135813. October 25, 2001.

Question:
A verbal agreement was entered into by Fernando Santos, Meliton Zabat and Nieves
Reyes providing that Santos would act as financier while Nieves and Zabat would take
charge of solicitation of members and collection of loan payments in a lending business
venture proposed by Nieves with the understanding that Santos would receive 70% of the
profits while Nieves and Zabat would earn 15% each. Their verbal agreement was
formalizes when the parties executed the ‘Article of Agreement’.

As chairman of the Monte Maria Development Corporation, Gragera sought short-term

loans for members of the corporation. Santos and Gragera executed an agreement
providing funds for Monte Maria’s members.

Santos filed a complaint for recovery of sum of money and damage against Spouses
Reyes for having misappropriated funds intended for Gragera. However, spouses Reyes
asserted that they were partners and not mere employees of Santos.

Are spouses Reyes partners of Santos in this case?

Answer:
Yes, they were partners of Santos.

Under Art. 1767 of the Civil Code, by the 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.

In the case at bar, the "Articles of Agreement" stipulated that the signatories shall share
the profits of the business in a 70-15-15 manner, with petitioner getting the lion's share.
This stipulation clearly proved the establishment of a partnership.
5. JOSEFIN REALUBIT vs. PROSENCIO JASO AND EDEN JASO
G.R. NO. 178782; SEPTEMBER 21, 2011
J. PEREZ

Question:
Petitioner Josefina Realubit (Josefina) entered into a Joint Venture Agreement with Francis
Eric Amaury Biondo (Biondo), a French national,for the operation of an ice manufacturing
business. For and in consideration of the sum of P500,000.00, however, Biondo subsequently
executed a Deed of Assignment transferring all his rights and interests in the business in
favor of respondent Eden Jaso (Eden), the wife of respondent Prosencio Jaso. With Biondo’s
eventual departure from the country, the Spouses Jaso caused their lawyer to send Josefina
a letter. apprising her of their acquisition of said Frenchman’s share in the business and
formally demanding an accounting and inventory thereof as well as the remittance of their
portion of its profits.

Faulting Josefina with unjustified failure to heed their demand, the Spouses Jaso commenced
the instant suit with the filing complaint against Josefina, her husband, Ike Realubit (Ike), and
their alleged dummies, for specific performance, accounting, examination, audit and inventory
of assets and properties, dissolution of the joint venture, appointment of a receiver and
damages.

Is Eden Jaso considered a partner in this case and are the Spouses Jaso entitled to Biondo’s
share in the profits of the venture?

Answer:

Yes.

Generally understood to mean an organization formed for some temporary purpose, a joint
venture is likened to a particular partnership or one which “has for its object determinate
things, their use or fruits, or a specific undertaking, or the exercise of a profession or vocation.”
The rule is settled that joint ventures are governed by the law on partnerships
which are, in turn, based on mutual agency or delectus personae. Insofar as a partner’s
conveyance of the entirety of his interest in the partnership is concerned, Article 1813 of the
Civil Code provides as follows:

“Art. 1813. A conveyance by a partner of his whole interest in the partnership does not
itself dissolve the partnership, or, as against the other partners in the absence of
agreement, entitle the assignee, during the continuance of the partnership, to interfere
in the management or administration of the partnership business or affairs, or to
require any information or account of partnership transactions, or to inspect the
partnership books; but it merely entitles the assignee to receive in accordance with his
contracts the profits to which the assigning partners would otherwise be entitled.
However, in case of fraud in the management of the partnership, the assignee may
avail himself of the usual remedies.
 In the case of a dissolution of the partnership, the assignee is entitled to receive his
assignor’s interest and may require an account from the date only of the last account
agreed to by all the partners.”

From the foregoing provision, it is evident that “(t)he transfer by a partner of his partnership
interest does not make the assignee of such interest a partner of the firm, nor entitle the
assignee to interfere in the management of the partnership business or to receive anything
except the assignee’s profits. The assignment does not purport to transfer an interest in the
partnership, but only a future contingent right to a portion of the ultimate residue as the
assignor may become entitled to receive by virtue of his proportionate interest in the capital.”
Since a partner’s interest in the partnership includes his share in the profits, we find that the
CA committed no reversible error in ruling that the Spouses Jaso are entitled to Biondo’s
share in the profits, despite Juanita’s lack of consent to the assignment of said Frenchman’s
interest in the joint venture. Although Eden did not, moreover, become a partner as a
consequence of the assignment and/or acquire the right to require an accounting of the
partnership business, the CA correctly granted her prayer for dissolution of the joint venture
conformably with the right granted to the purchaser of a partner’s interest under Article 1831
of the Civil Code
.