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\slmult0\fi0\tx6290 \up0 \expndtw0\charscalex121 \ul0\nosupersub\cf1\f2\fs22 G.R
. No. 31057\tab \up0 \expndtw0\charscalex121 September 7, 1929\par\pard\ql \li30
93\ri2916\sb0\sl-260\slmult0\fi173\tx3930 \up0 \expndtw0\charscalex112 ADRIANO A
RBES, ET AL., plaintiffs-appellees, vs. \up0 \expndtw0\charscalex111 VICENTE POL
ISTICO, ET AL., defendants-appellants. \line\tab \up0 \expndtw0\charscalex109 Di
gested By: Kathy Florence Baldonado \par\pard\ql \li1441\sb245\sl-253\slmult0 \u
p0 \expndtw0\charscalex109 FACTS: \par\pard\qj \li1441\ri1264\sb7\sl-253\slmult0
\fi720 \up0 \expndtw0\charscalex119 This is an action to bring about liquidation
of the funds and property of the \up0 \expndtw0\charscalex114 association call
ed "Turnuhan Polistico & Co." The plaintiffs were members or \up0 \expn
dtw0\charscalex113 shareholders, and the defendants were designated as president
-treasurer, directors \up0 \expndtw0\charscalex110 and secretary of said associa
tion. \par\pard\ql \li1441\ri1264\sb6\sl-255\slmult0\fi720 \up0 \expndtw0\charsc
alex114 By agreement of the parties, the court appointed a commissioner to exami
ne \up0 \expndtw0\charscalex110 all the books, documents, and accounts of "Turnu
han Polistico & Co. \line \up0 \expndtw0\charscalex117 The commissioner rendered
his report, showing a balance of the cash on hand in \up0 \expndtw0\charscalex1
16 the amount of P24,607.80. The trial court in accepting the report,
rendered \up0 \expndtw0\charscalex116 judgment, holding that the association "T
urnuhan Polistico & Co." is unlawful, and \up0 \expndtw0\charscalex114 sentencin
g the defendants jointly and severally to return the amount of P24,607.80, \up0
\expndtw0\charscalex114 as well as the documents showing the uncollected credits
of the association, to the \up0 \expndtw0\charscalex112 plaintiffs in this c
ase, and to the rest of the members of the said association \up0 \exp
ndtw0\charscalex112 represented by said plaintiffs. \par\pard\qj \li1441\ri1264\
sb5\sl-255\slmult0\fi720 \up0 \expndtw0\charscalex119 There is no question t
hat "Turnuhan Polistico & Co." is an unlawful \up0 \expndtw0\charscalex11
5 partnership, but the appellants allege that because it is so, some
charitable \up0 \expndtw0\charscalex114 institution to whom the partnership fund
s may be ordered to be turned over, should \up0 \expndtw0\charscalex117 be inclu
ded, as a party defendant. The appellants refer to article 1666 of the Civil \up
0 \expndtw0\charscalex111 Code, particularly the second paragraph, which provide
s: \par\pard\qj \li1441\ri1266\sb1\sl-260\slmult0 \up0 \expndtw0\charscalex120 \
u8220?When the dissolution of an unlawful partnership is decreed, the profits sh
all be \up0 \expndtw0\charscalex119 given to charitable institutions of the domi
cile of the partnership, or, in default of \up0 \expndtw0\charscalex113 such, to
those of the province.\u8221? \par\pard\ql \li1441\sb246\sl-253\slmult0 \up0 \e
xpndtw0\charscalex110 ISSUE: \par\pard\qj \li1441\ri1268\sb2\sl-260\slmult0 \up0
\expndtw-2\charscalex100 WHETHER OR NOT A CHARITABLE INSTITUTION IS A N
ECESSARY PARTY IN THIS \up0 \expndtw-4\charscalex100 CASE. \par\pard\ql \li14
41\sb246\sl-253\slmult0 \up0 \expndtw0\charscalex111 RULING: \par\pard\qj \li144
1\ri1265\sb4\sl-257\slmult0\fi720 \up0 \expndtw0\charscalex111 NO, no charitab
le institution is a necessary party in the present case of \line \up0
\expndtw0\charscalex121 determination of the rights of the parties. The action w
hich may arise from said \line \up0 \expndtw0\charscalex117 article, in the case
of unlawful partnership, is that for the recovery of the amounts \line \up0 \ex
pndtw0\charscalex115 paid by the member from those in charge of the administrati
on of said partnership, \line \up0 \expndtw0\charscalex117 and it is not necessa
ry for the said parties to base their action to the existence of \line \up0 \exp
ndtw0\charscalex112 the partnership, but on the fact that of having con
tributed some money to the \line \up0 \expndtw0\charscalex120 partnership c

apital. Hence, the charitable institution of the domicile of the \line

\up0 \expndtw0\charscalex120 partnership, and in the default thereof, those of t
he province are not necessary \line \up0 \expndtw0\charscalex111 parties in this
case. \par\pard\qj \li1441\ri1264\sb241\sl-260\slmult0\fi720 \up0 \expndtw0\cha
rscalex117 In so ruling, the court had the occasion of explaining the scope and
spirit of \line \up0 \expndtw0\charscalex116 the provision of Article 1666 of t
he Civil Code (now Article 1770 of the New Civil \line \up0 \expndtw0\charscal
ex106 Code). \par\pard\ql \li1441\sb246\sl-253\slmult0 \up0 \expndtw0\charscalex
113 With regard to Contributions of an Illegal Partnership: the court holds that
-\par\pard\qj \li1441\ri1269\sb2\sl-260\slmult0 \up0 \expndtw0\charscalex119 (1
) The partner who limits himself to demanding only the amount contributed by \li
ne \up0 \expndtw0\charscalex118 him need not resort to the partnership contract
on which to base his action since
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g2}{\bkmkend Pg2}\par\pard\qj \li1441\sb0\sl-255\slmult0 \par\pard\qj\li1441\sb0
\sl-255\slmult0 \par\pard\qj\li1441\sb0\sl-255\slmult0 \par\pard\qj\li1441\sb0\s
l-255\slmult0 \par\pard\qj\li1441\ri1264\sb190\sl-255\slmult0 \up0 \expndtw0\cha
rscalex122 \ul0\nosupersub\cf1\f2\fs22 said contract does not exist in the eyes
of the law, the purpose from which the \up0 \expndtw0\charscalex118 contribution
was made has not come into existence, and the administrator of the \up0 \expndt
w0\charscalex118 partnership holding said contribution retains what belongs to o
thers, without any \up0 \expndtw0\charscalex115 consideration; for which reason
he is not bound to return it and he who has paid in \up0 \expndtw0\charscalex113
his share is entitled to recover it. \par\pard\qj \li1441\ri1266\sb5\sl-256\slm
ult0 \up0 \expndtw0\charscalex117 (2) Our Code does not state whether, up
on the dissolution of the unlawful \up0 \expndtw0\charscalex114 partnership
, the amounts contributed are to be returned by the partners, because it \up0 \e
xpndtw0\charscalex115 only deals with the disposition of the profits; but the fa
ct that said contributions are \up0 \expndtw0\charscalex115 not included in the
disposal prescribed profits, shows that in consequences of said \up0 \expndtw0\c
harscalex115 exclusion, the general law must be followed, and hence the

partners should \up0 \expndtw0\charscalex113 reimburse the amount of their re

spective contributions. \par\pard\qj \li1441\ri1267\sb9\sl-250\slmult0 \up0 \exp
ndtw0\charscalex115 (3) Any other solution is immoral, and the law will
not consent to the latter \up0 \expndtw0\charscalex118 remaining in the po
ssession of the manager or administrator who has refused to \up0 \expndtw0\chars
calex113 return them, by denying to the partners the action to demand them. \par
\pard\ql \li1441\sb0\sl-253\slmult0 \par\pard\ql\li1441\sb15\sl-253\slmult0 \up0
\expndtw0\charscalex113 With regard to Profits of an Illegal Partnership: the c
ourt holds that -\par\pard\qj \li1441\ri1264\sb5\sl-256\slmult0 \up0 \expndtw0\c
harscalex112 (1) The article cited above permits no action for the pur
pose of obtaining the \up0 \expndtw0\charscalex120 earnings made by the unlaw
ful partnership, during its existence as result of the \up0 \expndtw0\charscalex
114 business in which it was engaged, because for the purpose, the partner will
have to \up0 \expndtw0\charscalex117 base his action upon the partnership contra
ct, which is to annul and without legal \up0 \expndtw0\charscalex116 existence b
y reason of its unlawful object; and it is self evident that what does not \up0
\expndtw0\charscalex111 exist cannot be a cause of action. \par\pard\qj \li1441\
ri1268\sb0\sl-256\slmult0 \up0 \expndtw0\charscalex113 (2) Profits earned in the
course of the partnership, because they do not constitute or \up0 \expndtw0\cha
rscalex118 represent the partner's contribution but are the result of the indust
ry, business or \up0 \expndtw0\charscalex115 speculation which is the object of
the partnership, and therefor, in order to demand \up0 \expndtw0\charscalex117 t
he proportional part of the said profits, the partner would have to base his act
ion \up0 \expndtw0\charscalex110 on the contract which is null and void,
since this partition or distribution of the \up0 \expndtw0\charscalex110
profits is one of the juridical effects thereof. \par\pard\qj \li1441\ri1271\sb0
\sl-260\slmult0 \up0 \expndtw0\charscalex117 (3) Furthermore, it would be immora
l and unjust for the law to permit a profit from \up0 \expndtw0\charscalex114 an
industry prohibited by it.
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