CASE DIGESTS SANTOS V REYES Facts: 1.

Pet and def were introduced to each other by Zabat to enter a buss venture, offerred by resp, where pet will be the financier while def and Zabat will collect loans and solicit members 2. They agreed to a 70-15-15 share in profit, 70 to pet 3. Launched in June 1986 4. Gragera entered the picture when def introduced him to pet. Gragera is the chairman of Monte Maria 5. Gragera sought loans from members of his corporation 6. Pet and Gragera executed an agreement: a. providing funds for Monte Marias members b. P1.31/P1000 daily commission c. Resp acted as representative of pet while his wife, the creddit investigator 7. pet, resp and Zabat executed an Article of Agreement cofirming their earlier verbal agreement 8. Pet and resp learned that Zabat operates the a similar lending buss and they expelled him from the partnership 9. Contract with Gragera, however, continued 10. Pet in 1987 filed a complaint vs resp for collection of sum of money for, as employees of pet, misappropriating funds intendded as commissions of Gragera (only 3M out of the 4.6M was remitted to Gragera) 11. Defenses of respondents: a. Both: they were partners, not employees of pet and the suit is intennddedd to deprive them of their rightful share b. Arsenio: she was enticed by pet to take the place of Zabat so she left ADB (previous job) c. Def: She was a business partner whose work only involves worksheets to inform pet of his possible earnings d. Def: Collection of money was turned over to Gragera and she did not handle sums 12. Pets reply: a. As to agreement w/Gragera, he was not partners with resp and Zabat bu the latter were his mere employees b. His partnership with Gragera is distinct from that of the resp c. Since he learned of Zabats activities, he ceased infusing funds in the partnership between Zabat at resp d. In resps capacity as bookkeeper, she received all payments and deducted Grageras commission e. She also determines loan releases Issues: 1. W/N resps were partners with pet 2. W/N they are entitled to shares of profit 3. W/N Grageras commissions were misappropriated by resps Ruling: 1. RTC ruled in favor of resp for the following reasons: a. Pet and resp were partners and the latter are entitled to share of profits b. Gragera was not pets partner but was only a commissions agent c. Pet failed to prove he entrusted money to resp 2. CA first affirmed the decision minus resps counterclaim and later on in an MR, RTC decision was reinstated in toto, CA said: a. It was resp who broached to pet the iddea of a lending buss and introduced pet to Gragera b. Arsenio received profit-shares from 86-87

c. Partnership contract was executed after pet agreed to Grageras proposal d. Pet shared capital while resps contributed services/industry with the iention of sharing profits out of the buss e. CA disbelieved misappropriation of resp since the latter was responsible of daily cash flow only 3. SC: a. affirmed that pet and resp are partners because there was never an intention to dissolve partnership between Nieves and pet, despite the expulsion of Zabat. Arsenio was just added as a partner to replace Zabat b. Gragera was never part of the partnership. He only received commissions under the Monte Maria collection and the commissions were fixed regardless of the bussiness operations expenses. c. The Articles of Agreement referred to Nieves (resp) as the second party who was given responsibilities, whille Arsenio replaced Zabat d. Arsenio received monthly allowances, profit-shares and dividends e. Evidence of receipt of collection by resp Nieves was not established and her entries in the books were just based on the 100% assumptive collection of Gragera f. The review of the CAs decision should only be that on the amount of net profit based on which, the shares of resps can be determined

SEVILLA V CA Facts: 1. Noguera and Tourist World service (both resp) entered into a lease contract in Oct 1960 for the latters lease of Nogueras premises in Mabini St. 2. Lina Sevilla held herself accountable solidarily with Tourist for the payment of monthly rental 3. When the branch office was opened, it was run by Una Sevilla (pet) payable to Tourist by any airline for any fare brought in o the efforts of Lina Sevilla 4. 4% was to go to Lina, 3% to be withheld by the Tourist 5. In 1961, Tourist was informed that Lina was connected to a rival firm 6. Bec the branch office was losing, Tourists board of directors decided to close it down issuing 2 reso: a. Abolition of office of mngr and VP of Ermita branch b. Authority to corporate sec to receive the branchs properties 7. Contract of Tourist and Noguera to use the premises was terminated and Tourist never used it 8. The area was locked so Lina Sevilla and her employees couldnt enter 9. Carlos and Lina Sevilla filed a complaint vs Tourist and Noguera w/prayer for mandatory pprelim injunction 10. Trial court dismissed 11. Noguera presented evidence on her counterclaim 12. Trial court again dismissed the new complaint (Lina) and reinstated counterclaim (Nog) of parties for lack of merit 13. Petitioner: a. It was a joint buss venture bet her and Tourist b. She was signatory to the lease agreement w/Noguera c. She did not receive any salary from Tourist and she earned commissions for her own booking for her own buss d. She just shares 3% commission with Tourist out of her 7% commission e. She handles some of the expenses while Tourist takes care of the rent & other expenses in consideration of the 3% f. She was given the br managers title for appearances sake only Issues: 1. W/N Tourist unilaterally disco the telephone line at the branch office on Ermita 2. W/N the padlocking by Tourist was actionable of not 3. Who are the lessee? Tourist or Tourist and Lina 4. W/N Lina is Tourists employee or buss partner Ruling: 1. RTC: a. Lina is an employee of Tourist b. Tourist had the prerogative to terminate the lease, being the true lessee CA affirmed 2. SC: a. Sevilla was not an employee of Tourist bec: i. The ends of her work and the means to achieve it were nto controlled by Tourist ii. She bound herself solidarilly liable with Tourist in the lease, pparting w/her own money for the pursuit of Tourists buss w/c is not a charac of ER-EE relationship iii. When the br office was opened, the same was run by Lina iv. Lina not in Tourists payroll v. Branch mngr is just a name. right-of-control test still determines ER-EE relationship b. Buss venture not of partnership but agency i. Part. is characterized by equall interest in the capital contributed, each ppartner has equal rights in the conduct of buss

ii. Lina and Tourist did not hold themselves out as partners iii. She is Tourists agent rendering services in behalf of the latter iv. In a letter, Lina recognized Tourists authority as owner of the buss c. This however, cannot be revoked at will bec this agency has been created for mutual interest d. The revocation entitles Lina to damages e. Telephone lines were not reconnected, allthough not disconneted, by Tourist w/c is equivaalennt to condonation. Tourist must shoulder the responsibility f. Although the lessee, Tourist does not have the right to padlock it w/o informing the occupant. Lina is not a stranger to the contract being held solidarily liable to it g. From the chronnicles of event there seems to be a malevolent design to pput Lina in a bad light following disclosures that she had worked with a rival firm. So Tourist must pay moral damages ESTANISLAO V CA Facts: 1. Pet and resp are sis and bro who are co-owners of a certain lot at Aurora Blvdleased to Shell. 2. The bro and sis agreed to open annd operate a gas station with an initial investment of 15K from the rentals of Shell 3. a joint affidavit was executed by them in April 1966 4. they agreed to help their bro Eligio (pet) by allowing him to operate and manage the station. 5. They applied for dealership with Shell 6. Resp Remegio helped Eligio in management for almost a year 7. the parties ennteredd into aanother Additional Cash Pledge Agreement with Shell reiterating the deposit of 15K to Shell for advancement of fuel by pet, and that it supersedes the earlier agreement 8. For a time, pet submitted financial statements onn the operatio of buss but then stopped so a ddemand letter was sent to him for update on acctg of profits 9. Due to the figures seenn in the finanncial records, resps filed a complaint orderin pet to: a. Execute a pub doc embodying the provisions of partnership between them b. Render a formal acctg of buss operations from 1966-67, 68-69 c. Pay resp their lawful shares in net profits not lower than 150K plus 1% interest per month from date of demand til full payment d. Attys fees annd cost of suit 10. RTC dismissed the complaint but amended it in favor of respondents. CA affirmed in toto. Issues: 1. W/N the Additional Cash Pledge Agreement has any import 2. W/N there is partnership amongn the sis and bro Ruling: 1. The Addl Cash Pledge is but a duplicate of the earlier doc. It was intended only to give way to the dealership eneterd into bet pet and resp and Shell. Mainly bec, the first agreement was silent as to the application of advanced rentals as capital to the gas station buss. So the amendment in the second doc is to change from three parties to only one, the dealership of the the gas station to conform to the policy of Shell. 2. There is no doubt that the parties hereto formed a partnership when they bound themselves to contribute money to a common fund with the intention of dividing the profits among themselves: a. testimonies of private respondent Remedies Estanislao and Atty. Angeles. Petitioner that submitted to private respondents were periodic accounting of the business. b. Petitioner gave a written authority to private respondent Remedies Estanislao, his sister, to examine and audit the books of their "common business' c. Respondent Remedios assisted in the running of the business.

SUNGA V CHUA Facts: 1. Resp entered into a buss venture with Jacinto in the distribution of Shellane LPG in 1977 2. For convenience, Jacinto registered the buss in his own name as sole proprietor 3. They contributed 100K each with the itnention o dividing the profits aamongg themselves 4. Jacinto, aas the manager had assistant, sis of the wife of respondent 5. He would also receive income from mnging 6. the buss was doing well for sometime anndd fincial statements andd mngt inventories were submitted to him by Jacinto 7. Resp, however, suspected they were undervalued by Jacinto 8. upon jacintos death, buss was taken over by pets w/o resps consent 9. Despite respondent's repeated demands upon petitioners for accounting, inventory, appraisal, winding up and restitution of his net shares in the partnership, petitioners failed to comply. 10. She continued operations convertinng it to her own use and advantage 11. she then, disbursed 200K to resp as part of his share in partnership with a promise that the former would make the complete inventory and winding up of the properties of the business establishment. 12. she failed to comply 13. Resp filed for Winding Up of Partnership Affairs, Accounting, Appraisal and Recovery of Shares and Damages with Writ of Preliminary Attachment with RTC 14. But pets filed for dismissal asserting that SEC has the jurisdiction 15. Pet: not liable for partnership shares, etc and that SEC has the jurisdiction 16. they again filed for dismissal, this time alleging that claim for winding up of partnership affairs, accounting and recovery of shares in partnership affairs, accounting and recovery of shares in partnership assets bec it must be prosecuted vs the estate of jacinto in a probate proceeding 17. Pet to CA certiorari questioning denial of motion to dismiss 18. CA denied for lack of merit 19. RTC in favor of resp. Appeal dismissed by CA: a. Pets ordered to render an accounting of the buss operatons of Shellite from the time Jacinto died b. To return and restitute to the partnership all assets that were converted to their personal use c. Return to resp of his share in the assets of the partnership d. To wind up the affairs of the partnertship and terminate it e. Brach of trust and bad faith, moral and exemplary damages, attys fees litigation expenses Issues: 1. W/N there existed a partnership between Jacinto and resp 2. W/N laches or prescription applies 3. Non-registration with SEC does not affect validity of partnership Ruling: 1. Dead Mans Statute under the RoC w/c prohibits testimonies of a surviving party about events that happened before the opoosing partys death can only be applied if the circumstances are present: a. Witness is a party or rep of the party in whose behalf the case is prosecuted b. The action is vs the exec or admin of the estate of the deceased c. SM is claim or demand vs the estate of the deceased d. Testimony refers to a matter of fact w/c occurred before the death of the deceased Letter b not applicable bec is it not brought vs the estate but by the estate of the deceased It is also not applicable bec under the rules, when the exec/admin sets up the counterclaim, Dead Mans Statute is not applicable anymore bec the other party may testify as to the events happening before the death Josephine not a rep of resp but his witness

Pets reliance on the Dead Mans Statute does not defeat trial court and CAs finding of facts that there was a partnership bet resp and Jacinto. SC cannot go over the evidence again to review this fact 2. Laches or prescription is unavailing bec: a. An action to enforce an oral contract prescribes in 6 years, it was filed 3 years after the death of Jacinto b. An action to demand accounting of a partners interest accrues at the date of dissolution, in the absence of any contrary agreement . Dissolution happened when Jacinto died but partneship caould not be terminated until the complete winding up of its business 3. Art. 1768 says the juridical personality of a partnership is still upheld despite the nonregistration of the name with SEC as provided for the the 1st par of Art 1772

FEU LEUNG V IAC Facts: 1. Sun Wah Panciteria in Sta. Cruz, Manila was registered as a single proprietorship under the name of petitioner. It was established in 1955 2. Resp, however , adduced evidence that he was indeed a partner of that panciteria, having contributed 4K at its initial establishment: a. when Sun Wah became operational, he gave 4K to pet as his contribution as a partner. b. It was evidenced by a receipt in Chinese characters and was proven to be as what resp claims it to be c. testimony was also corroborated by two other witnesses, one of which also showed receipt of his investment (4K) and was also proven true. d. A check of 12K was also shown and proven to be the deposit of pet to resp who claims it is his share of profit for 1974 3. Pet: a. No contri from resp. he used his savings from previious employment as capital b. He presented various permits and licences proving Sun Wah to be a single proprietorship under his name c. Denied issuing a check to resp 4. Trial court rules for resp ordering pet to pay 22% of annual profit from 1955 until fully paid 5. Motion for new trial filed by pet asking the court to allow resp to present evidence showing the net profit of the buss 6. Trial court amended decision: 22% of 8000/day net profit from judicial demand until fully paid 7. CA modified: a. 22% of Net profit, 2000/day from jud demand to May 1971 b. 22% of Net profit, 8000/day from May 1971 to Aug 1975 c. Thereafter, 22% of Net profit, 8000/day until fully paid But then reinstated the decision of the trial court Both courts found that there was a partnership formed between pet and resp Issues: 1. W/N they were partners 2. Prescription because the receipt of contributionwas in 1955 but the action was filed only in 1978. No written demands 3. Accuracy of amount of net profit Ruling: 1. They are because by a contract of partnership, two or more bind themselves to contribute money, property or industry to a commom fund, with the intention of dividing the profits among themselves. 2. A partner shares not only in profits but also in the losses of the firm. It would be perfectly plausible that the partners would just wait and let the buss grow before they get their profits. It would be incorrect to state that if a partner does not assert his rights anytime within ten years from the start of operations, such rights are irretrievably lost. Right to demand accounting of shares of a partner exists as long as partnership exists 3. The testimony as to the profits was given by the cashier of Sun Wah. It was not rebutted by pet. 4. Resp has the right to decree a dissolution of partnership bec under Art 1883, a dissolution is proper when: a. A partner has been guilty of such conduct as tends to affect prejudicially the carrying on of the business; b. Breach of partnership agreement and partners conduct shows it is impracticable to carry on a buss w/him Partnership should wind up its affairs, return the capital and do other incidents of resolution for it has becom inequitable to continue

Lyons v Rosenstock Facts: 1. Partnership between Elser and Lyons existed when the latter contributed to the buy and sell of real property, executed by Elser. 2. Lyons left for a yr and a half giving Elser the GPA to manage their three properties. 3. Elser decided to buy San Juan Estate thinking that Lyons would agree to join him in the venture 4. Elser used his own money to purchase it but its insufficiency prompted him to obtain a loan from a Chnese. 5. The latter wouldn't agree with the loan w/o the sinature of fidelity assurance. 6. Fidelity agreed to be the surety only if Elser would mirtgage a prop as security. 7. Elser MG the Carriedo prop owned by him and Lyons. 8. Lyons, however, did not agree to join Elser in the buss venture so the San Juan Estate venture was pursued by Elser with his other assoc including JK Pickering 9. When Lyons returned, he said it is okay to MG the prop 10. After sometime, earlier than the maturity date of the loan, Elser paid off his debt w/the Chinese and cancelled the MG to Fidelity Issue: 1. W/N Lyons, through the MGd prop in Carriedo became partly owner of the prop, San Juan Estate, acquired through the loan Ruling: No, bec there was no general partnership existing bet the two. Elser. The MG executed in Carriedo was immed paid off creating no damage to Lyons

Fortis v Hermanos Facts: 1. Plaintiff, an employee of defendants during the years 1900, 1901, and 1902, brought this action to recover a balance due him as salary for the year 1902. 2. He alleged that he was entitled, as salary, to 5 per cent of the net profits of the business of the defendants for said year. 3. The complaint also contained a cause of action for the sum of 600 pesos, money expended by plaintiff for the defendants during the year 1903. 4. The court below, in its judgment, found that the contract had been made as claimed by the plaintiff; that 5 per cent of the net profits of the business for the year 1902 amounted to 26,378.68 pesos, Mexican currency; 5. that the plaintiff had received on account of such salary 12,811.75 pesos, Mexican currency, and ordered judgment against the defendants for the sum 13,566.93 pesos, Mexican currency, with interest thereon from December 31, 1904. 6. The court also ordered judgment against the defendants for the 600 pesos mentioned in the complaint, and intereat thereon. The total judgment rendered against the defendants in favor of the plaintiff, reduced to Philippine currency, amounted to P13,025.40. 7. The defendants moved for a new trial, which was denied, and they have brought the case here by bill of exceptions. Issue: Ruling: NO. a. The plaintiff had no voice nor vote in the management of the affairs of the company. The fact that the compensation received by him was to be determined with reference to the profits made by the defendants in their business did not in any sense make by a partner therein. b. The fact that to determine palintiffs salary, profits minus expenses should be computed does not make the contract between plain. and def. Partnership c. Dead mans statute not applicable bec it is not a claim against the deceaseds estate or against his administrator. It was brought vs a partnership that has a juridical personality d. The appellants in their brief say that the plaintiff is entitled to no compensation for his services thus rendered, because by the provisions of article 1711 of the Civil Code, in the absence of an agreement to the contrary, the contract of agency is supposed to be gratuitous. That article i not applicable to this case, because the amount of 600 pesos not claimed as compensation for services but as a reimbursment for money expended by the plaintiff in the business of the defendants. W/N plaintiff was a co-partner of defendant

Arbes v Polistico Facts: 1. This is an action to bring about liquidation of the funds and property of the association called "Turnuhan Polistico & Co." The plaintiffs were members or shareholders, and the defendants were designated as president-treasurer, directors and secretary of said association. 2. The defendants objected to the commissioner's report, but the trial court, having examined the reasons for the objection, found the same sufficiently explained in the report and the evidence, and accepting it, rendered judgment, holding that the association "Turnuhan Polistico & Co." is unlawful, and sentencing the defendants jointly and severally to return the amount of P24,607.80, as well as the documents showing the uncollected credits of the association, to the plaintiffs in this case, and to the rest of the members of the said association represented by said plaintiffs, with costs against the defendants. Issues: 1. That not all persons having an interest in this association are included as plaintiffs or defendants; 2. that the objection to the commissioner's report should have been admitted by the court below Ruling: 1. This court held then that in an action against the officers of a voluntary association to wind up its affairs and enforce an accounting for money and property in their possessions, it is not necessary that all members of the association be made parties to the action. (Borlasa vs. Polistico, 47 Phil., 345.) 2. Under section 140 of the Code of Civil Procedure it is made the duty of the court to render judgment in accordance with the report of the referee unless the court shall unless for cause shown set aside the report or recommit it to the referee. This provision places upon the litigant parties of the duty of discovering and exhibiting to the court any error that may be contained therein. The appellants stated the grounds for their objection. The trial examined the evidence and the commissioner's report, and accepted the findings of fact made in the report. We find no convincing arguments on the appellant's brief to justify a reversal of the trial court's conclusion admitting the commissioner's findings. The action which may arise from said article, in the case of unlawful partnership, is that for the recovery of the amounts paid by the member from those in charge of the administration of said partnership, and it is not necessary for the said parties to base their action to the existence of the partnership, but on the fact that of having contributed some money to the partnership capital. Art 1666 A partnership must have a lawful object, and must be established for the common benefit of the partners. When the dissolution of an unlawful partnership is decreed, the profits shall be given to charitable institutions of the domicile of the partnership, or, in default of such, to those of the province.

- provides that when the dissolution of the unlawful partnership is decreed, the profits cannot inure to the benefit of the partners, but must be given to some charitable institution. Apropos of this, it is asserted: If the partnership has no valid existence, if it is considered juridically non-existent, the contract entered into can have no legal effect; and in that case, how can it give rise to an action in favor of the partners to judicially demand from the manager or the administrator of the partnership capital, each one's contribution? Wherefore considering this contract asnon-existent, by reason of its illicit object, it cannot give rise to the necessary action, which must be the basis of the judicial complaint. Furthermore, it would be immoral and unjust for the law to permit a profit from an industry prohibited by it. Our Code does not state whether, upon the dissolution of the unlawful partnership, the amounts contributed are to be returned by the partners, because it only deals with the disposition of the profits; but the fact that said contributions are not included in the disposal prescribed profits, shows that in consequences of said exclusion, the general law must be followed, and hence the partners should reimburse the amount of their respective contributions. Any other solution is immoral, and the law will not consent to the latter remaining in the possession of the manager or administrator who has refused to return them, by denying to the partners the action to demand them.